UC-NRLF 


$c  m  4bi 


LIBRARY  OF 

ALLEN  KNIGHT 

CERTIFIED  PUBLIC  ACCOUNTANT 
502  California  Street 

SAN     FRANCISCO,     CALIFORNIA 


GIFT   OF 


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MARSHALL'S 


Corporation  and  Voucher 


Accounting 


BY 

CARL  C.  MARSHALL, 

Author  of   "Bookkeeping  and  Business  Training,"   and  joint  author  of  the 
Ellis   "Learning  by  Doing"   Series. 


CEDAR  RAPIDS,  IOWA: 

GOODYEAR-MARSHALL  PUBLISHING  CO. 

1907. 


Copyright  1901 
GOODYEAR-MARSHALL  PUBLISHING  COMPANY 


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Marshall's  Corporation  and  Voucher 

Accounting. 


CORPORATIONS. 

A    Corporation    is  an  organization  of  persons,  specially  authorized  by  law  to  act  as 

one  person.     Corporations  have  certain  general  powers,  rights,  and  responsibilities  which  are 
specified  by  the  law  under  which  the  corporation  is  created. 

A  Charter  is  a  formal  document  issued  by  the  proper  authority,  setting  forth  the 
power,  purposes,  and  term  of  existence  of  a  corporation,  and  by  the  issuance  of  which  the 
corporation  attains  to  a  legal  existence. 

Classification — Corporations  are  either  Public  or  Private.  Public  corporations  in- 
clude the  persons  of  an  entire  community,  as  a  city,  or  town,  and  are  formed  for  govern- 
mental purposes.  Private  corporations  are  those  formed  by  the  voluntary  association  of  in- 
dividuals, and  include  all  corporations  not  public. 

Private  corporations  are  further  classified  into: — 

1.  Religious,  or  those  comprising  churches  or  other  religious  societies. 

2.  Benevolent,  or  those  formed  for  promoting  educational,  charitable  or  fraternal  un- 
dertakings, as  colleges,  fraternal  societies,  hospitals,  etc. 

3.  Commercial,  or  those  organized  for  pecuniary  gain,  as  the  various  companies 
formed  for  manufacturing,  trade,  transportation,  and  other  business  purposes.  Commercial 
corporations  are  often  spoken  of  as  joint  stock  companies. 

We  limit  our  attention  here  to  commercial  corporations,  or  companies.  The  powers^ 
privileges  and  obligations  of  these  organizations,  vary  considerably  in  the  different  states, 
and  it  is  always  necessary  for  those  who  form  commercial  corporations  to  consult  carefully 
the  state  or  national  laws  under  which  the  proposed  company  is  to  be  organized. 

The  Stock  of  a  commercial  corporation  is  the  money  or  other  capital  which  it  is  pro- 
posed to  invest  in  the  concern,  and  which  is  represented  by  a  certain  number  of  shares,  usual- 
ly of  the  denomination  of  $25,  $50,  or  $100  each.  An  agreement  to  take  or  subscribe  for 
these  shares  constitutes  the  first  formal  step  in  the  organization  of  a  corporation. 

Procedure  in  the  Organization  of  a  Commercial  Corporation. 

Preliminary  Discussion,  Promotion,  Etc. — A  corporation  may  be  orig- 
inated as  an  entirely  new  business  enterprise,  or  it  may  be  formed  in  order  to  make  more  ef- 
fective a  business  already  established  as  a  partnership,  or  single  proprietorship.  Corpor- 
ations are  also  frequently  formed  to  combine  a  number  of  existing  corporations,  or  other  bus- 
iness concerns  into  a  single  company.  Combinations  of  this  kind,  are  frequently,  but  improp- 
erly spoken  of  as  "trusts." 

The  first  step  in  the  formation  of  a  corporation,  is  an  informal  discussion  among  the 
proposed  incorporators,  as  to  the  advisability  of  forming  the  company.  Frequently  the  forma- 
tion of  a  corporation  is  brought  about  through  the  efiforts  of  some  individual,  who  makes  it 
his  business  to  induce  others  to  join  in  organizing  the  company.  The  business  of  bringing 
about  the  organization  of  companies  in  this  way  is  called  "promoting,"  and  the  person  who 
accomplishes  it  is  known  as  a  "promoter."  The  promoter  of  a  corporation,  usually  receives  a 
certain  per  cent  of  the  stock  as  compensation  for  his  services. 

380300 


2  ^    >  *  ,,  ..1   .  ,CaRP0iATJ0N  AND  VOUCHER  ACCOUNTING. 

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Minutes  of  Meetings.  When  the  perspns  interested  in  the  proposed  corporation 
meet  to  discuss  plans  of  organization,  etc.,  a  prehminary  organization  is  usually  effected,  a 
temporary  chairman  and  secretary  being  chosen.  The  secretary  should  prepare  minutes  of 
the  meetings  which  are  recorded  in  the  "Minute  Book."  Any  common  blank  book  may  be 
used  for  this  purpose.  If  subsequent  meetings  are  held,  the  minutes  of  the  previous  meeting 
should  be  read  by  the  secretary,  and,  if  no  corrections  are  required,  they  are  duly  "Ap- 
proved" and  are  signed  by  the  president  and  the  secretary. 

An  illustration  of  the  minutes  of  a  corporation  meeting  will  be  found  on  page  9. 

Stock  Subscription  Agreement.  The  first  formal  and  legal  step  in  the  or- 
ganization of  a  commercial  corporation,  consists  in  the  signing  of  the  Stock  Subscription 
Agreement  by  the  proposed  incorporators.  This  comprises  a  mutually  binding  contract  on  the 
part  of  the  several  signers  to  take  and  pay  for  the  shares  of  stock  which  each  subscribes  for. 
If  the  company  is  to  be  composed  of  many  stockholders,  a  special  book  called  a  Stock  Sub- 
scription Book  may  be  used  for  this  purpose,  but  more  often  the  agreement  is  in  the  form  of 
an  ordinary  legal  document,  which,  when  signed  and  witnessed  (usually  by  a  Notary  Pub- 
lic) is  filed  in  the  secretary's  office.  (See  form  of  Stock  Subscription  Agreement  on  page 
9.)  It  is  not  necessary  for  the  entire  amount  of  capital  stock  to  be  subscribed  before  the  cor- 
poration is  formally  organized.  This  may  be  done  whenever,  in  the  judgment  of  the  incor- 
porators, sufficient  stock  has  been  subscribed  to  insure  the  success  of  the  company. 

Adoption  of  Articles  of  Incorporation.  When  a  sufficient  amount  of 
stock  has  been  subscribed,  the  incorporators  hold  a  meeting,  and  proceed  to  perfect  the  or- 
ganization of  the  company.  This  consists  in  the  adoption  of  Articles  of  Incorporation.  These 
should  set  forth : — 

1.  The  official  name  of  the  corporation. 

2.  The  purpose  for  which  it  is  formed. 

3.  The  period  of  time  for  which  it  is  organized. 

4.  Its  location,  or  place  where  its  principal  business  is  to  be  transacted. 

5.  The  amount  of  capital  stock  and  the  number  of  shares  into  which  this  is  to  be  di- 
vided. 

6.  The  names  of  the  officers  and  directors  elected  for  the  first  official  term. 

7.  The  names  of  the  incorporators,  whose  signatures  are  duly  attested  by  a  notary  pub- 
lic, or  other  competent  officer. 

Other  provisions  may  be  added,  as  those  relating  to  the  duties  and  powers  of  the  of- 
ficers, the  amount  of  indebtedness  the  corporation  may  incur,  or  any  other  general  regula- 
tions of  the  corporation  affairs  which  may  be  deemed  advisable  and  which  are  not  in  conflict 
with  the  laws  of  the  state  in  which  the  corporation  is  organized. 

The  form  on  page  10  affords  a  fair  illustration  of  Articles  of  Incorporation  as  usually 
adopted,  but  it  should  be  remembered  that  these  forms  are  subject  to  much  variation. 

When  Articles  of  Incorporation  have  b'een  duly  adopted,  and  signed  by  the  incorpor- 
ators, and  the  signatures  duly  certified  to  by  a  notary  public  or  other  competent  official,  the 
instrument  is  forwarded,  with  the  required  fee,  to  the  office  of  the  Secretary  of  State,  where 
it  is  officially  recorded,  and  the  original  copy,  duly  certified,  is  returned  to  the  officers  of  the 
company,  and  becomes  in  the  contemplation  of  the  law,  the  charter,  by  the  issue  of  which  the 
corporation  attains  to  a  legal  existence,  and  becomes  competent  to  transact  business  under 
its  corporate  name. 

Powers  and  Liabilities. 

The  powers,  duties,  rights,  and  limitations  of  corporations  and  of  the  individuals  who 
compose  them,  are  subject  to  considerable  variation  in  the  several  states.  Within  the  limits 
of  the  constitution,  each  state  regulates  corporations  in  its  own  way,  and  the  student  of 
these  organizations  should  begin  by  studying  the  special  laws  of  his  own  state,  which  pro- 
vide the  conditions  and  limitations  under  which  they  may  be  organized.  Still,  there  are  a 
number  of  general  principles  governing  incorporated  concerns  which  are  substantially  the 
same  in  all  the  states. 


POWERS,  LIABILITIES,  ETC. 


Powers.    Among  the  general  powers  and  rights  of  corporations  are  the  following : 

1.  The  power  of  perpetual  succession,  or  of  corporate  existence  for  the  time  named  in 
its  charter. 

2.  The  right  to  enter  into  contracts  and  to  sue  and  be  sued  under  the  corporate  name. 

3.  The  right  to  acquire  and  dispose  of  real  estate,  patents,  copy  rights,  or  other  prop- 
erty, the  same  as  a  natural  person. 

4.  The  right  to  possess  and  use  a  common  seal  for  the  certification  of  corporate  acts  bv 
its  officials. 

5.  The  right  to  adopt  such  by-laws  or  other  rules  for  its  government,  as  are  not  in  con- 
flict with  its  charter,  or  with  the  laws  of  the  land. 

Voting  and  Elections.— The  directors  and  other  officers  of  a  corporation  are 
usually  elected  annually.  The  voting  is  generally  by  ballot,  each  stockholder  having  a  num- 
ber of  votes  equal  to  the  number  of  his  paid-up  shares. 

Must  Keep  Books. —  Corporations  are  usually  required  to  keep  duly  certified  rec- 
ords of  all  official  acts,  also  books  of  account  showing  all  business  transactions.  These  rec- 
ords are  open  to  the  inspection  of  all  stockholders. 

Liabilities. —  Corporations,  like  individuals,  are  liable  for  the  lawful  acts  of  their 
agents,  also  for  trespass  or  other  wrongful  acts  committed  by  such  agents  or  officers,  when 
acting  within  their  official  authority.  Corpoiations  are  also  liable  to  their  own  stockholders 
for  any  infringements  of  their  rights,  occasioned  through  the  acts  of  Corporation  officers, 
when  acting  within  their  authority.  The  general  liabilities  of  corporations  vary  consider- 
ably in  the  different  states,  being  modified  by  the  local  laws. 

Liabilities  of  Stockholders — The  individual  liability  of  stockholders  for  the 
debts  of  the  corporation  depends  upon:  (i)  The  form  of  incorporation;  (2)  the  class  of 
stock  held;  (3)  the  provisions  of  the  charter;  and  (4)  the  local  statutes.  With  reference  to 
individual  liability,  corporations  have  been  divided  into : 

1.  Unlimited  Liability  Corporations,  or  those  in  which  each  stockholder  is  personally 
liable  for  all  debts  of  the  corporation. 

2.  Single  or  Limited  Liability  Corporations,  in  which  the  individual  stockholders  are 
liable  only  to  the  amount  of  their  unpaid  stock  subscriptions. 

3.  Double  Liability  Corporations,  in  which  the  stockholders  are  liable  to  the  full 
amount  of  the  stock  subscribed  for. 

Note — In  some  states,  Limited  Liability  Corporations  are  required  to  affix  the  word  "Limited"  to  their 
corporate  name,  whenever  the  same  is  publicly  used. 

Corporation    Finances. 

The  profits  or  losses  of  a  corporation  are  apportioned  among  the  stockholders  according 
to  the  amount  of  capital  stock  respectively  held  by  them. 

Dividends  are  distributions  of  profits,  being  designated  as  a  certain  percentage  of 
the  stock  upon  which  the  distribution  is  based.  Thus,  by  a  "six  per  cent  dividend"  is 
meant  such  a  distribution  of  profits  as  will  entitle  each  stockholder  to  an  amount  of  profit 
equal  to  six  per  cent  of  the  par  value  of  the  stock  which  he  holds. 

Assessments  are  levies  made  upon  stockholders,  of  a  certain  percentage  of  tlie 
stock  held  by  them,  the  motley  thus  raised  being  used  for  any  legitimate  purpose  that  niay 
be  decided  upon  by  the  management  of  the  company.  Assessments  are  usually  made  to 
cover  deficiencies,  or  to  meet  expenses  for  which  the  available  resources  of  the  company  are 
inadequate. 

An  Installment  is  a  part  payment  of  a  stock  subscription.  Sometimes  stock  sub- 
scriptions are  required  to  be  paid  in  full  at  a  specified  date  after  the  subscription  is  signed, 
and  sometimes  the  subscriptions  are  paid  in  installments  of  a  certain  per  cent  of  the  par  value 
of  the  stock.  Frequently,  paid-up  stock  is  issued  to  certain  of  the  stockholders  of  property 
transferred,  or  services  rendered  to  the  corporation.  •  The  time  and  manner  of  paying  for 
stock  subscription,  is  purely  a  matter  of  mutual  contract  among  the  stockholders. 


CORPORATION  AND  VOUCHER  ACCOUNTING. 


Classes  of  Stock.  Not  all  the  stock  issued  by  a  corporation  assures  the  same 
rights,  privileges,  and  profits  to  the  persons  to  whom  it  is  issued,  and  this  variation  in  the 
conditions  and  limitations  under  which  stock  is  issued,  gives  rise  to  several  classes  of  stock, 
the  more  important  of  which  are  here  designated  as  follows : — 

1.  Common  Stock.  This  is  the  ordinary  stock  that  is  subscribed  for  when  a  company 
is  organized,  and  which  is  issued  to  the  incorporators  when  paid  for  in  accordance  with  the 
terms  provided  by  the  articles  of  incorporation. 

2.  Treasury  Stock.  This  is  unissued  stock  that  is  reserved  and  held  in  the  name  of 
the  company,  as  an  asset  to  be  disposed  of  as  the  exigencies  of  the  business  may  require. 

3.  Preferred  Stock.  In  the  organization  of  a  company,  it  is  often  desirable  to  issue  a 
portion  of  the  stock  under  conditions  that  shall  entitle  it  to  a  regular  specified  dividend 
which  is  to  be  paid  out  of  any  accruing  profits — and  which  must  be  paid,  before  any  divi- 
dends are  apportioned  to  the  common  stock.  The  stock  thus  favored  is  known  as  "Preferred 
Stock"  or  "Preferential* Shares."  If  the  stock  is  entitled  to  the  dividend,  whether  or  not 
any  profits  have  been  made,  the  amount  bein.g'  carried  over  from  year  to  year,  the  total  divi- 
dends for  each  year  being  finally  paid  when  there  are  sufficient  profits,  the  stock  is  known 
as  "Cumulative  Preferred"  or  "Guaranteed"  stock. 

Preferred  stock,  however,  is  not  entitled  to  any  dividends  in  excess  of  the  amount  speci- 
fied, and  for  this  reason,  it  comprises  a  more  stable  and  less  speculative  investment  than  the 
ordinary  stock,  which,  under  some  circumstances,  may  earn  a  very  high  rate  of  dividends 
and  under  others,  none  at  all. 

4.  Donated  Stock.  This  is  stock  which  is  contributed  pro  rata  by  the  several  stoclc- 
holders,  and  to  be  sold  for  the  purpose  of  raising  needed  funds  to  carry  on  the  business.  It 
is  transferred  to  the  company  and  held  in  reserve  as  an  asset  the  same  as  Treasury  Stock. 

Franchise.  A  franchise  is  any  special  privilege  granted  to  a  corporation  by  a  mu- 
nicipal council  or  other  law-making  body.  Franchises  include  such  privileges  as  the  right 
to  use  the  streets  of  a  city  for  a  street  car  line,  for  water  or  gas  pipes,  telephone  or  electric 
lighting  appliances,  etc.  A  franchise  is  usually  granted  for  a  term  of  years,  and  is  in  the 
nature  of  a  contract  between  the  companv  receiving  it  and  the  municipality  b);^  which  it  i« 
granted. 

Bonds.  Bonds  are  the  written  or  printed  obligations  of  public  or  private  corpor- 
ations, to  pay  specified  sums  of  money,  with  interest  on  the  same,  in  accordance  with  the 
terms  named  in  the  instrument.  Bonds  usually  run  for  a  term  of  years,  the  interest  being 
payable  quarterly  or  semi-annually,  and  represented  on  the  instrument  by  detachable  cob 
pons,  which  are  presented  for  payment  as  they  mature.  The  bonds  of  private  corporations 
are  usually  secured  by  mortgage,  or  other  lien  on  the  stock  or  other  property  of  the  corpor- 
ation. 

The  Earnings  of  a  company  are  the  receipts  derived  from  carrying  on  its  business. 
Gross  Earnings  are  the  total  receipts ;  Net  Earnings  are  the  profits  that  are  left  after  pay- 
ing all  expenses. 

Securities.  This  is  a  general  term  for  Bonds,  Notes,  Stocks,  etc.  When  such  se- 
curities are  deposited  as  a  basis  for  loans,  they  are  known  as  Collateral,  and  the  operation 
of  thus  depositing  them  is  known  as  Hypothecation. 

Fund.  This  term  implies  cash  that  is  set  apart  as  a  reserve  for  any  specific  purpose, 
related  to  the  business  of  a  corporation.  The  cash  belonging  to  a  company  or  a  municipality 
is  often  distributed,  or  classified  into  a  number  of  fun'ds,  proportioned  to  the  probable  re- 
quirements of  each,  as  the  Contingency  Fund,  Reserve  Fund,  Salary  Fund,  Advertising 
Fund,  Sinking  Fund,  etc.  This  method  of  disposal  is  sometimes  a  great  aid  in  the  systematic 
management  of  the  corporation  finances. 

Bonus.  This  is  an  amount  either  given  or  received  by  a  corporation,  on  account  of 
some  special  privilege  growing  out  of  its  business.  Thus,  the  people  of  a  community  may 
grant  a  bonus  of  cash  or  other  property  to  a  company  in  consideration  of  the  general  and 
public  benefits  arising  from  its  establishment  in  the  community  as  an  industrial  enterprise. 
On  the  other  hand  a  corporation  may  pay  a  bonus  to  a  city  or  town  for  the  privileges  con- 
ferred under  its  franchise. 


ORGANIZATION— BOOKS  REQUIRED. 


Corporation    Accountancy. 

In  their  application  to  corporation  affairs,  the  principles  of  bookkeeping  are  the  same  as 
those  employed  in  other  business  undertakings.  The  laws  of  debit  and  credit  are  of  course 
universal  in  their  application,  whether  the  business  be  conducted  as  an  individual  or  a  corpor- 
ate proprietorship. 

But  the  peculiar  relations  sustained  by  the  members  of  a  corporation  to  the  business  it- 
self, the  representation  of  the  proprietorship  interest  by  means  of  stock,  and  the  method  of 
apportioning  losses  and  gains,  gives  rise  to  a  number  of  accountancy  requirements  and  meth- 
ods, that  are  not  employed  in  individual  or  partnership  concerns. 

With  respect  to  bookkeeping  requirements,  corporations  may  be  grouped  into  two  gen- 
eral classes : — 

First,  the  so-called  "close  corporations,"  or  those  in  which  the  stock  is  permanently  held 
by  a  few  individuals,  there  being  few  changes  in  the  personnel  of  the  stockholders,  and  few 
or  no  transfers  of  stock. 

Second,  the  "open  corporations,"  or  those  in  which  a  considerable  part  of  the  stock  is 
on  the  market,  being  commonly  dealt  in  for  speculative  or  investment  purposes,  there  being 
a  large  number  of  stockholders,  with  frequent  transfers  of  stock.  Corporations  of  this  class 
are,  for  the  most  part,  heavily  capitalized  concerns,  that  do  an  extensive  business,  having 
their  headquarters  in  some  large  city,  with  branch  offices  in  other  parts  of  the  country. 

Of  these  two  classes  of  corporations,  the  smaller,  or  close  corporations,  are  much  the 
more  common.  They  often  consist  of  ordinary  business  partnerships  that,  for  greater  con- 
venience and  stability  of  operation,  have  been  re-organized  in  the  form  of  corporations. 

For  obvious  reasons,  the  accountancy  methods  adapted  to  the  use  of  this  class  of  com- 
panies, are  of  more  importance  to  the  average  student  than  are  those  special  books  and  de- 
vices that  are  used  only  by  the  great  concerns,  that  have  their  offices  in  the  larger  cities. 
For  this  reason,  the  scheme  of  corporation  accountancy  given  in  the  present  course  has 
been  selected  with  a  view  to  illustrate  the  needs  of  ordinary  incorporated  concerns  such  as 
are  to  be  found  in  nearly  every  business  community,  and  with  the  usual  bookkeeping  meth- 
ods of  which  every  student  of  accountancy  needs  to  be  familiar. 

The  books  and  accounts  required  to  be  kept  in  a  corporation  business  may  be  divided 
into  two  distinct  groups : — 

1.  The  Corporation  Books  are  those  that  relate  to  the  stockholders  as  con- 
tributory proprietors  and  owners.  These  include  the  Installment  Book,  Stockholders' 
Ledger,  Installment  Ledger,  Assessment  and  Dividend  Book,  etc. 

2.  The  Operating  Books  are  those  that  relate  to  the  general  mercantile  or 
industrial  operations  of  the  company,  as  the  Journal,  General  Ledger,  Cash  Book,  Sales 
Journal,  etc.,  and  which  are  kept  in  the  same  manner  as  though  the  business  were  not  in- 
corporated. We  shall  first  offer  a  general  description  of  the  Corporation  Books,  and  their 
purpose,  and  afterward  illustrate  the  use  of  these  in  the  case  of  a  suppositional  corporation. 

At  the  outset,  it  is  well  to  emphasize  the  fact  that  there  is  much  variation  among  corpor- 
ations as  to  the  form  and  kinds  of  books  used.  These  will  be  determined  by  the  nature 
of  the  business  and  the  conditions  under  which  the  corporation  is  formed  and  conducted. 

Note — The  corporation  books  described  in  the  following  pages,  correspond  to  those  that  are  to  be  used  in 
conducting  the  affairs  of  the  Central  Canning  and  Drying  Co.,  hereafter  to  be  introduced,  and  should  be  care- 
fully studied.  They  will  serve  also  to  illustrate  the  methods  of  accounting  usually  employed  by  the  majority 
of  incorporated  business  concerns. 

Books  Required  for  the  Organization  of  a  Corporation. 

If  the  corporation  represents  the  inauguration  of  a  new  business  enterprise,  several 
books  and  forms  will  be  required,  that  may  not  be  needed  in  the  case  of  a  company  whose 
business  has  been  previously  conducted  as  an  individual  proprietorship  or  a  partnership. 
In  the  latter  case,  paid-up  stock  is  likely  to  be  issued  to  the  several  stockholders  as  soon  as 
the  incorporation  is  formed,  and  there  may  be  no  necessity  for  either  a  Stock  Subscription 
Book,  or  any  provision  for  installments. 

Assuming,  however,  the  formation  of  a  corporation  for  the  establishment  of  a  business, 


CORPORATION  AND  VOUCHER  ACCOUNTING. 


in  which  all  or  a  part  of  the  stock  is  to  be  subscribed  and  paid  for  in  installments  at  such 
times  as  the  capital  may  be  needed  in  developing  the  business,  it  would  be  necessary  at  the 
time  the  first  installment  is  payable,  to  open  an 

Installinent  Book.  In  this  book  the  stock  subscribers  are  listed  each  time  an  in- 
stallment is  called  in,  the  several  amounts  due  being  recorded  opposite  their  names,  with  col- 
umns for  amount  and  date  of  payment,  etc.   A  form  of  this  book  is  shown  on  page  13. 

Note — Unless  there  are  a  large  number  of  stockholders,  and  several  installments  are  to  be  paid,  it  would 
be  unnecessary  to  keep  accounts  of  the  installments  in  a  separate  book.  Loose  sheets  could  be  used  for  each 
installment,  these  being  afterward  attached  in  the  front  part  of  the  Installment  Ledger. 

Installment  Certificate  BooK.  This  book  consists  of  Installment  Certifi- 
cates, or  receipts  for  installment  payments,  which  are  issued  to  the  stockholders  at  the  time 
the  payments  are  made.  These  certificates  are  often  referred  to  as  "installment  scrip." 
They  are  transferable,  and  when  the  final  installment  is  paid,  are  surrendered  and  stock  cer- 
tificates are  issued  in  their  stead.     See  form  on  page  12. 

The  Installment  Ledger  is  a  book  in  which  each  stockholder  is  charged  with 
the  par  value  of  the  stock  for  which  he  has  subscribed  (as  shown  by  the  Stock  Subscription 
Book)  and  credited  for  the  several  installments  as  they  are  paid,  the  latter  being  posted 
from  the  Installment  Book. 

When  the  final  installment  is  paid,  the  account  is  closed,  the  several  installment  certifi- 
cates are  surrendered,  and  a  stock  certificate  for  the  full  amount  of  the  subscription  is  issued 
to  the  stockholder,  who  is  then  credited  in  the  Stockholders'  Ledger  for  this  amount. 

When  an  installment  certificate  is  transferred,  the  person  to  whom  it  is  transferred  is 
debited  for  the  number  of  shares  covered  by  the  certificate,  and  the  person  transferring  them 
is  credited. 

The  Installment  Ledger  is  merely  an  auxiliary  and  temporary  book,  its  purpose  being 
to  give  an  exhibit  of  the  various  stockholders'  accounts  preceding  the  payment  in  full  of 
their  several  stock  subscriptions.  When  the  subscribed  stock  is  all  paid  for,  the  Installment 
Ledger  ceases  to  be  active.  It  would  not  be  needed  at  all  unless  the  stock  subscriptions  are 
to  be  paid  in  a  series  of  installments.     See  form  on  page  14. 

Stock  Certificates.  When  the  stock  subscribed  for  by  any  subscriber  is  paid  in 
full,  either  by  installments  or  otherwise,  the  secretary  issues  to  him  a  Stock  Certificate,  as 
an  evidence  of  such  payment,  and  of  his  legal  ownership  of  the  stock  represented  by  the  cer- 
tificate. 

The  Stock  Certificate  Book  contains  the  stock  certificate  blanks  and  corresponding  stubs. 
These  certificates  are  issued  to  stockholders  when  the  stock  represented  by  them  is  fully  paid 
up.  They  are  issued  in  such  denominations  as  the  stockholder  may  wish,  usually  in  "blocks" 
of  five,  ten,  twenty,  or  one  hundred  shares.   See  form  on  page  15. 

The  Stockholders'  Ledger. 

This  book  contains  a  record  of  all  shares  issued  to  the  several  stockholders,  also  of  the 
certificates  surrendered,  transferred,  or  re-issued.  Its  entries  come  from  the  Stock  Certifi- 
cate Book,  and  it  should  always  show  the  exact  amount  of  stock  that  is  controlled  by  the 
several  stockholders.     See  page  16. 

Transferring  Stock. 

At  any  time  in  the  history  of  a  corporation,  it  is  likely  that  some  of  the  prospective  or 
actual  stockholders  may  wish  to  transfer  their  interests,  wholly  or  in  part,  to  other  parties. 
In  fact,  the  right  of  a  stockholder  thus  to  transfer  his  interests,  and  without  the  consent  of 
the  other  stockholders,  is  one  of  the  principal  distinctions  between  corporations  and  ordinary 
business  partnerships. 

A  stockholder  may  not,  however,  by  the  transfer  of  his  stock,  escape  his  liability  for  any 
corporation  debts  that  exist  at  the  time  the  transfer  is  made.  Neither  may  a  subscriber  for 
stock  that  is  partially  paid  up,  escape  liability  for  the  remainder  of  the  subscription,  by  trans- 
ferring his  Installment  certificates.  If  the  person  to  whom  these  certificates  are  transferred 
defaults  in  the  payment  of  the  remaining  installments,  the  company  retains  the  right  to  col- 
lect them  from  the  original  subscriber. 


TRANSFERRING  STOCK. 


The  holder  of  either  a  stock  or  an  installment  certificate  may  transfer  it  by  a  proper 
and  legally  certified  assignment,  a  form  of  which  is  usually  printed  on  the  back  of  the  certifi- 
cate. 

Transferring  Installment  Certificates.  When  an  installment  certificate 
is  transferred  and  the  transferee  presents  it  for  record,  the  transferred  certificate  is  cancelled 
(usually  by  writing  across  the  face  in  red  ink  the  word  "transferred")  and  re-attached  to  its 
original  stub.  A  new  certificate  for  the  same  amount  is  then  issued  to  the  transferee.  The 
person  who  made  the  transfer  is  then  credited  in  the  Installment  Ledger  for  the  amount  of 
the  stock  transferred,  and  the  account  of  the  transferee  is  debited  for  the  same  amount. 

Should  the  holder  of  a  certificate  wish  to  transfer  a  portion  of  his  holdings,  and  for  an 
amount  not  represented  by  any  certificate  held  by  him,  he  first  surrenders  the  certificate  (or 
certificates)  already  issued,  which  is  cancelled  and  re-attached  to  the  original  stub.  Other  cer- 
tificates are  then  issued  equal  in  amount  to  the  certificate  surrendered,  and  of  whatever  de- 
nominations are  desired.  The  subscriber  is  credited  in  the  Installment  Ledger  for  the  cer- 
tificates surrendered,  and  debited  for  those  re- issued.  Either  of  the  new  certificates  may  then 
be  transferred  as  previously  explained. 

Transferring  Stock  Certificates.  Stock  Certificates  are  transferred  in  the 
same  manner  as  installment  certificates,  but  the  entries  made  in  the  Stockholders'  Ledger 
are  just  the  opposite  of  those  required  in  the  Installment  Ledger,  that  is,  when  a  stock  certifi- 
cate is  surrendered  the  stockholder  is  debited,  and  when  a  certificate  is  issued  the  stockholder 
is  credited.  The  reason  for  this  difference  is  obvious,  since,  in  the  Installment  Ledger,  the 
holder  is  debited  for  stock  subscribed,  while  inthe  Stockholder's  Ledger  he  is  credited  for  all 
shares  issued. 

There  should  be  records  in  the  Installment  Ledger  or  the  Stockholder's  Ledger  for 
every  certificate  issued,  surrendered,  transferred,  or  re-issued.  For  an  illustration  of  the 
manner  of  recording  transfers,  see  the  account  with  R.  C.  Venable  in  the  Installment  Ledger 
on  page  14,  also  in  the  Stockholder's  Ledger  page  16. 

The  Corporation  by-laws  should  always  provide  that  transfers  of  stock  shall  be  recorded 
in  the  corporation  books.  Otherwise,  it  would  be  impossible  to  know  who  the  stockholders 
of  a  corporation  are;  neither  would  it  be  possible  for  the  corporation  bookkeepers  to  know 
what  persons  are  entitled  to  dividends  or  liable  for  assessments,  or  for  the  officers  to  know 
the  number  of  votes  which  the  several  stockholders  are  entitled  to  cast  at  elections,  etc. 

When  assessments  are  to  be  levied  or  dividends  declared,  it  is  customary  to  close  the 
books  against  transfers  for  a  short  time  before  the  assessment  or  dividend  is  to  be  paid.  This 
is  necessary  in  order  that  the  bookkeepers  may  have  time  to  make  the  proper  apportionment 
among  the  stockholders. 

Levying  and  Collecting  Assessments. 

Stock  may  be  assessable  or  non-assessable,  according  to  the  agreement  under  which  it 
is  issued.  W^hen  assessments  are  permitted,  they  may  be  levied  either  by  the  directors  of  the 
corporation,  or  by  a  vote  of  the  stockholders,  as  may  be  determined  by  the  by-laws  of  the 
corporation  or  by  the  statutes  of  the  state  in  which  the  incorporation  was  made. 

If  assessments  are  not  paid,  the  stock  may,  after  due  notice,  be  declared  forfeited  and 
may  then  be  sold,  the  proceeds  being  used  to  pay  the  assessment,  and  the  remainder,  if  any, 
being  returned  to  the  person  whose  stock  was  sold.  There  is  much  variation  in  the  laws  of 
the  several  states,  as  to  the  terms  and  conditions  governing  assessments  and  the  forfeiture  of 
stock  for  non-payment. 

Assessment  BooR.  When  an  assessment  has  been  decided  upon,  a  list  of  the 
stockholders  is  made  in  the  Assessment  Book,  a  form  of  which  is  shown  on  page  17.  If  there 
are  but  a  few  stockholders,  and  if  assessments  are  seldom  made,  a  special  book  is  not  re- 
quired, an  assessment  list  being  simply  made  out  on  a  sheet  of  paper  ruled  for  the  purpose. 
The  assessment  list  shows  the  num1)er  of  shares  upon  which  each  stockholder  is  assessed,  the 
amount,  date  of  payment,  etc.  The  assessment  lists  are  numbered  in  the  order  the  assess- 
ments are  made,  the  first  list  being  "No.  One,"  the  second  "No.  Two,"  and  so  on. 


CORPORATION  AND  VOUCHER  ACCOUNTING. 


Notice  of  Assessment.  When  an  assessment  has  been  levied,  a  proper  notifica- 
tion, duly  signed  by  the  president  and  the  secretary  of  the  company,  should  be  mailed  to  each 
stockholder. 

The  following  would  be  an  appropriate  form  for  such  notification : 

Hampton,  III.,  June  17,  1901. 
Mr.  N.  A.  Walters,  Vinton,  Iowa. 

Dear  Sir : — At  a  legally  called  meeting  of  the  stockholders  of  the  Hampton  Milling  Co., 
which  was  held  at  the  company's  office  in  this  city  on  June  15,  1901,  it  was  decided  by  a 
majority  vote  of  the  stock  represented  at  said  meeting,  to  levy  an  assessment  of  five  (5) 
per  cent  of  the  par  value  of  all  the  common  stock  of  said  company,  the  same  to  be  paj'^able  in 
cash  to  C.  W.  Moore,  treasurer,  at  the  company's  office  in  this  city,  on  or  before  July  i,  1901. 

It  was  further  voted  that  payments  of  said  assessments,  if  not  made  on  or  before  Aug. 
I,  1901,  should  be  declared  delinquent,  and  that  all  stock  upon  which  said  assessments  had 
not  been  paid  should,  after  published  notice,  be  sold  at  public  vendue  on  vSept.  i,  1901,  at  two 
o'clock  p.  m.  at  the  company's  office  in  this  city. 

The  amount  of  said  assessment  standing  against  your  name  as  holder  of  Certificate  No. 
12',  Fifty  Shares,  is  Two  Hundred  and  Fifty  Dollars  ($250)  and  you  are  hereby  notified  to 
pay  the  same  in  accordance  with  the  terms  of  this  notification. 

Very  respectfully, 

J.  B.  Wilson,  President. 
Chas.  S.  Blake,  Secretary. 

Note — In  some  states  the  law  provides  that  notices  of  assessment  may  be  legally  made  by  publication  for 
a  specified  period  in  any  newspaper  of  general  circulation  in  the  community  where  the  company  is  located. 

Declaring  and  Distributing  Dividends. 

Dividends  are  usually  declared  by  a  majority  vote  of  the  Board  of  Directors,  and  they 
can  be  legally  paid  out  of  accumulated  profits  only. 

WHien  sufficient  gains  have- been  made  to  justify  the  declaring  of  a  dividend,  the  books 
are  closed  in  the  usual  manner,  after  which  the  Loss  and  Gain  Account  is  closed  into  "Sur- 
plus" and  "Dividend  No.  One,"  a  journal  entry  being  made  in  the  following  form : 

Loss  and  Gain $13767.25 

Dividend  No.  i 12500.00 

Surplus 1267.25 

For  net  gains  carried  to  Div.  No.  One  and  Surplus  for  a  five  per  cent  dividend  on  the 
issued  stock,  $250,000. 

Note — The  dividend  accounts  are  designated  by  number,  and  in  the  order  in  which  the  several  dividends 
are  declared. 

A  list  of  the  stockholders  is  then  made  out  in  the  Dividend  Book,  the  several  columns 
being  filled  out,  as  shown  in  the  form  of  this  book  on  page  17. 

When  the  dividends  are  paid,  an  entry  is  made  on  the  credit  side  of  the  Cash  Book  as 
follows : 

Dividend  No.  i 12500. 

For  dividends  paid  as  per  Dividend  Book,  page  17. 

Illustrative  Erxample. 

To  afford  the  student  an  illustration  of  the  practical  use  of  the  books  described  in  the 
preceding  pages,  and  of  the  general  procedure  required,  we  now  assume  the  organization  of 
a  corporation,  the  Glendale  Creamery  Co.,  of  Cedar  Rapids,  Iowa,  and  give  in  their  order 
the  assumed  facts,  and,  in  complete  form,  the  various  books  and  entries  required. 

The  student  is  recommended  to  study  these  books  and  entries  carefully,  and  in  connec- 
tion with  the  description  of  the  books  as  previously  given. 


GLENDALE  CREAMERY  CO. 


Memoranda  of  the  Glendale  Creamery  Co. 

1. 

A  number  of  persons  having  interested  themselves  in  the  formation  of  this  company, 
and  promises  having  been  secured  for  sufficient  stock  subscriptions  to  justify  its  incorpor- 
ation, the  several  incorporators  held  a  meeting  for  the  purpose  of  effecting  a  temporary  or- 
ganization, and  attaching  their  signatures  to  a  Stock  Subscription  Agreement. 

The  following  minutes  of  this  meeting  appear  on  the  Minute  Book : 

Cedar  Rapids,  Iowa,  March  i,  1900. 

Upon  the  above  date  the  proposed  incorporators  of  the  Glendale  Creamery  Co.  held  a 
meeting  at  the  office  of  John  S.  Cooper,  in  the  city  of  Cedar  Rapids,  for  the  purpose  of  at- 
taching their  signatures  to  a  Stock  Subscription  Agreement,  and  for  the  purpose  of  taking 
steps  for  the  permanent  and  legal  organization  of  the  company. 

John  S.  Cooper  was  elected  chairman  and  T.  S.  Maynard  secretary. 

The  chairman  then  announced  that  promises  had  been  secured  for  subscription  of  the 
entire  amount  of  stock  of  the  proposed  corporation,  and  he  suggested  that  before  proceed- 
ing further,  the  incorporators  present  attach  their  signatures  to  the  Stock  Subscription 
Agreement,  and  that  the  same  be  duly  certified  to,  and  made  a  part  of  the  company  records. 
The  suggestion  was  complied  with,  and  subscriptions  of  stock  to  the  amount  of  Fifty  Thou- 
sand Dollars  were  duly  signed  and  certified. 

Moved  by  Mr.  Stacy  that  a  committee  of  three  incorporators  be  appointed  by  the  chair- 
man to  prepare  Articles  of  Incorporation,  said  committee  to  make  its  report  at  a  meeting  to 
be  subsequently  called  by  the  chairman.  The  motion  was  carried  and  the  following  gentle- 
men were  appointed  by  the  chairman  to  serve  on  such  committee  : 

Chas.  M.  Stacy,  Homer  Allen,  and  M.  F.  Thompson. 

After  some  further  informal  discussion  of  the  prospects  and  affairs  of  the  proposed 
company,  the  meeting  was  adjourned  subject  to  the  call  of  the  chairman. 

T.   S.  Maynard,  Secretary. 

Approved  March  5,  1900. 
John  S.  Cooper, 

President. 

The  following  is  the  Stock  Subscription  Agreement,  as  signed  and  certified  at  the  meet- 
ing referred  to: 

Stock  Subscription  Agreemen 

Cedar  Rapids,  Iowa,  March  i,  1900. 
We,  the  undersigned,  hereby  subscribe  for  shares  of  stock  in  the  Glendale  Creamery  Co., 
a  corporation  to  be  organized  under  the  laws  of  the  State  of  Iowa,  the  same  to  have  a  capital- 
ization of  Fifty  Thousand  Dollars  ($50,000),  to  be  divided  into  Five  Hundred  (500) 
Shares  of  One  Hundred  Dollars  ($100)  each.  The  said  shares  subscribed  for  are  of  the 
numbers  and  amounts  hereunto  set  opposite  our  names,  and  are  to  be  paid  for  in  full  under 
such  rules  as  may  hereafter  be  legally  adopted  by  the  incorporators  of  said  company. 


NAME 

RESIDENCE 

NO.    OF  SHARES 

AMOUNT 

Chas.  M.  Stacy 

Cedar  Rapids,  la. 

One  Hundred 

$10000 

Homer  Allen 

Marion,  la. 

Fifty 

5000 

R.  C.  Venable 

Marion,  la. 

One  Hundred  and  Fifty 

15000 

John  S.  Cooper 
M.  F.  Thompson 

Cedar  Rapids,  la. 

One  Hundred 

•     10000 

Cedar  Rapids,  la. 

Seventy-Five 

7500 

T.  S.  Maynard 

Cedar  Rapids,  la. 

Twenty-Five 

2500 

10  CORPORATION  AND  VOUCHER  ACCOUNTING. 

Personally  appeared  before  me,  a  Notary  Public  in  and  for  the  County  of  Linn,  State 
of  Iowa,  the  persons  whose  names  are  hereunto  recorded,  and  who  in  my  presence  voluntar- 
ily signed  the  same,  as  subscribers  for  stock  in  the  Glendale  Creamery  Co.,  to  the  amounts 
set  opposite  their  names  in  the  foregoing  Stock  Subscription  Agreement. 

In  witness  whereof,  I  have  hereunto  set  my  name  and  the  official  seal  of  my  office,  at  the 
City  of  Cedar  Rapids,  County  of  Linn,  State  of  Iowa,  this  first  day  of  March,  1900. 

John  S.  Cooper, 

[seal]  Notary  Public. 

Note — The  following  Stock  Subscription  Agreement  illustrates  the  form  required  for  the  incorporation  of 
a  partnership  business  in  which  the  partners  are  to  receive  paid-up  stock  for  their  respective  interests,  other 
stock  being  subscribed  by  outside  parties. 

Stock  Subscription  Agreement  for  the  Formation  of  the  Delavan  Hardware  Co. 

Arcade,  Wis.,  Jan.  i,  1901. 

We,  the  undersigned,  hereby  agree  to  subscribe  for  the  number  of  shares  and  amounts  of  stock  set  op- 
posite our  names,  in  the  Delavan  Hardware  Co.,  an  incorporation  to  be  formed  under  the  laws  of  the  State 
of  Wisconsin,  and  in  accordance  with  the  following  conditions,  to-wit :  The  members  of  the  firm  of  Delavan,^ 
Randall  &  Co.,  in  consideration  of  the  legal  transfer  of  all  their  interest  in  the  property,  business  and  good 
will,  or  other  resources  of  said  firm,  also  their  liabilities  which  are  to  be  assumed  by  the  proposed  incor- 
poration, and  all  of  which  resources  and  liabilities  are  as  set  forth  in  the  duly  certified  financial  statement, 
of  this  date  already  submitted  and  hereby  accepted,  are  to  receive  and  have  issued  to  them  paid-up  stock  in 
said  proposed  incorporation,  as  follows : — 

Henry  F.  Delavan ;  Forty  Shares,  $4000. 

John  S.  Randall;  Thirty  Shares,  .S3000. 

Amos  Long;  Thirty  Shares,  $3000. 

The  shares  subscribed  for  by  the  undersigned  and  which  are  to  be  paid  for  in  cash  at  their  par  value, 
and  at  such  time  as  may  be  determined  by  the  directors  of  the  corporation,  are  as  follows : — 

A.  T.  Smith ;  Ten  Shares,  $1000. 

S.  H.  Day ;  Fifteen  Shares,  $1500. 

P.  S.  Johnson;  Twenty  Shares,  $2000. 

R.  W.  Miller;  Five  Shares,  $500. 

2. 

At  a  subsequent  meeting  on  March  5,  1900,  called  to  hear  the  report  of  the  committee 
appointed  at  the  meeting  of  March  i,  a  permanent  organization  was  effected  by  the  adoption 
of  the  following  Articles  of  Incorporation  and  by  the  election  of  the  officers  named : 

Articles  of  Incorporation  for  the  Glendale  Creamery  Co.  of 

Cedar  Rapids,  lowra. 

We,  the  undersigned,  desiring  to  form  ourselves  into  a  body  corporate,  under  the  laws 
of  the  State  of  Iowa,  do,  for  this  purpose  adopt  for  our  organization,  and  as  a  basis  for  said 
incorporation,  the  following  Articles  of  Incorporation: 

ARTICLE  I. 

The  name  of  this  corporation  shall  be  The  Glendale  Creamery  Co.,  and  its  principal 
place  of  business  shall  be  Cedar  Rapids,  in  the  County  of  Linn,  State  of  Iowa. 

ARTICLE  II.  . 

The  purpose  for  which  this  corporation  is  formed  is  the  carrying  on  of  a  general  dairy- 
ing and  milk  supply  business,  both  wholesale  and  retail,  and  the  manufacture  and  sale  of  dairy 
products  of  all  kinds,  also  the  acquisition  of  lands,  buildings,  machinery  and  such  other 
property  as  may  be  necessary  for  carrying  on  the  said  business,  and  to  do  such  other  acts  as 
are  usually  done  in  connection  with  the  management  of  said  business. 

ARTICLE  III. 

The  amount  of  the  Capital  Stock  of  said  corporation  shall  be  Fifty  Thousand  Dollars 
($50,000)  to  be  divided  into  Five  Hundred  Shares  of  One  Hundred  Dollars  ($100)  each,  the 
same  to  be  issued  only  when  paid  for  in  cash  or  its  equivalent. 


GLENDALE  CREAMERY  CO.  11 


ARTICLE  IV. 

This  corporation  shall  be  deemed  to  be  in  legal  existence,  and  its  officers,  qualified  to 
do  business  in  its  name  from  and  after  the  filing  of  these  Articles  of  Incorporation,  in  the 
Office  of  the  Secretary  of  State  for  the  State  of  Iowa,  due  notice  of  the  same  having  been  re- 
ceived by  the  corporation  secretary,  and  shall  continue  in  existence  thereafter  for  the  period 
of  twenty-five  years,  unless  sooner  legally  dissolved. 

ARTICLE  V. 

The  officers  of  this  corporation  shall  comprise  a  President,  Vice  President,  Secretary, 
Treasurer,  and  a  board  of  five  directors,  two  of  whom  shall  be  the  President  and  the  Secre- 
tary of  the  corporation,  who  shall  respectively  serve  as  the  President  and  Secretary  of  the 
Board  of  Directors.  These  officers  shall  be  chosen  at  the  regular  annual  meeting  of  the  cor- 
poration, and  their  terms  of  office  shall  continue  until  their  successors  have  been  chosen  and 
have  qualified. 

The  duties  of  said  officers  shall  be  such  as  may  be  prescribed  in  the  By-Laws  of  the  cor- 
poration, to  be  hereafter  adopted  by  said  Board  of  Directors,  as  hereinafter  provided  for. 

ARTICLE  VI. 

The  affairs  of  this  corporation,  in  so  far  as  they  are  not  regulated  by  these  Articles  of 
Incorporation  or  by  the  majority  vote  of  the  incorporators  at  any  legal  meeting,  shall  be  un- 
der the  control  of  the  Board  of  Directors,  who  shall  hold  meetings,  adopt  By-Laws,  and  take 
such  action  as  to  the  affairs  of  the  company,  as  may  seem  to  them  advisable. 

ARTICLE  VII. 

The  regular  annual  meetings  of  this  corporation  shall  occur  on  the  first  Tuesday  in 
April,  of  each  year,  at  such  place  and  hour  as  may  from  time  to  time  be  designated  by  the 
Board  of  Directors.  Until  the  occurrence  of  the  first  annual  meeting,  on  the  first  Tuesday  in 
April,  1901,  the  following  persons  are  hereby  elected  to  serve  in  the  offices  designated: 

President — John  S.  Cooper. 

Vice  President — Homer  Allen. 

Secretary — T.  S.  Maynard. 

Treasurer — Chas.  M.  Stacy. 

Directors — John  S.  Cooper,  T.  S.  Maynard,  M.  F.  Thompson,  R.  C.  Venable,  Chas. 
M.  Stacy. 

ARTICLE  VIII. 

At  all  stockholders'  meetings,  each  stockholder  shall  have  one  vote  for  each  share  of 
stock  owned  by  him,  as  shown  by  the  books  of  the  corporation. 

ARTICLE  IX. 

The  greatest  amount  of  indebtedness  for  which  this  corporation  shall  make  itself  liable, 
shall  not  at  any  time  exceed  two-thirds  of  its  capital  stock. 

ARTICLE  X. 

The  money  of  this  corporation  shall  be  paid  out  only  by  the  treasurer,  and  upon  war- 
rants duly  signed  by  the  president  and  the  secretary,  and  there  shall  be  kept  in  the  offices  of 
the  secretary  and  the  treasurer,  all  needed  books  and  accounts  necessary  to  show  plainly  and 
completely  the  financial  transactions  of  these  officers,  the  same  to  be  always  accessible  to  any 
stockholder  who  may  wish  to  inspect  them  during  regular  business  hours. 


CORPORATION  AND  VOUCHER  ACCOUNTING. 


ARTICLE  XI. 

These  Articles  of  Incorporation  may  be  amended  at  any  regular  meeting,  or  at  any 
meeting  called  for  the  purpose,  by  a  two-thirds  majority  of  all  stock  voted. 

Witness  our  hands  this  5th  day  of  March,   1901.  John  W.  Cooper. 

T,  S.  Maynard, 

M.  F.  Thompson. 

R.  S.  Venable. 

Homer  Allen. 

Chas.  M.  Stacy. 

Note — The  Articles  of  Incorporation  may  contain  any  other  general  regulations  that  the  stockholders 
may  wish  to  embody  in  them,  but  any  minor  matters,  such  as  relate  to  the  duties  of  officers,  the  order  of  busi- 
ness meetings,  etc.,  should  be  included  in  the  by-laws,  the  formulation  and  adoption  of  which  are  usuaMy 
left  to  the  Board  of  Directors. 

3. 

Upon  the  adoption  and  signing  of  the  Articles  of  Incorporation,  the  document  was  re- 
corded in  the  office  of  the  County  Recorder  and  a  copy  was  sent  for  record  to  the  office  of 
the  Secretary  of  State,  accompanied  by  the  legal  fees. 

When  the  Articles  of  Incorporation  were  returned  with  the  certificates  of  record  duly 
attached,  they  constituted  the  "Charter"  of  the  corporation,  which  now  began  its  legal  ex- 
istence. 

4. 

Upon  the  receipt  of  the  Charter,  the  President  called  a  meeting  of  the  Board  of  Directors, 
which  was  held  on  March  20,  1900,  and  at  this  meeting  it  was  decided  to  call  in  an  install- 
ment of  twenty-five  per  cent  of  the  stock  subscribed,  the  same  to  be  due  and  payable  to  the 
Treasurer  on  March  22,  1900. 

The  Secretary  also  made  out  Installment  Certificates  for  each  stockholder,  the  accom- 
panying form  illustrating  the  one  made  out  for  Chas.  M.  Stacy: 

Form  of  Installment  Certificate. 


Installment  Certificate. 


Amount.    $2500  00  100  Shares. 

Installment  Certificate  No.     ^ 

■jkj  I  Issued  by 

GLE^NDALE  CREAMERY  COMPANY. 

March  J_L±_  190A  Cedar  Rapids,  Iowa.  March  21,  ic)n__g_ 

This  Certifies  That  Chas.  M.  Stacy 

Per  cent   25 lias  to  his  credit  in  the  treasury  of  this  Company  the  sum  of 

Two  Thousand  Five  Hundred      _Dollars,  the  same  being 

No.  Shares     ^^^  the    ^^^^^      installment  of     25       percent  of      ^^^        shares 

due         March  21,  1900 

Amount     $2500  00  This  certificate  is  transferable  only  on  the  books  of  this 

company,  upon  surrender  of  same  by  the  holder  or  his  lawful 
representative. 

Received  the  attached  Certificate.      >  I»  evidence  whereof  we  have  duly  affixed  our  signatures 

and  the  corporate  seal  this    21st  day  of  March,    iqq  0 


Chas.M.  Stacy 


T.  S.  Maynard,     Secretary.        John  W.  Cooper,     President. 

[SEAL] 


At  this  meeting  action  v^as  taken  as  to  the  salaries  to  be  received  by  the  officers,  a  cor- 
porate seal  was  adopted,  a  superintendent  and  manager  was  elected,  a  committee  of  direc- 


GLENDALE  CREAMERY  CO. 


13; 


tors  was  appointed  to  report  upon  a  site  for  the  company's  plant,  and  to  advertise  for  plans 
for  buildings,  bids  for  machinery,  etc.  The  secretary  was  also  authorized  to  purchase  any 
needed  books  or  other  office  equipment  that  might  be  necessary  for  conducting  the  affairs  of 
the  corporation,  the  same  to  be  paid  for  out  of  the  first  funds  that  should  be  paid  into  the 
treasury.  The  Second  National  Bank  of  Cedar  Rapids  was  chosen  as  the  bank  of  deposit  for 
the  corporation  funds. 

5. 

The  installments  called  for  March  21,  having  been  duly  paid  and  certificates  issued  there- 
for, the  Installment  Book  stands  as  follows : 

Installment  No. — 

Comprising  payments  of  an  installment  of  ^^  per  cent  of  the  Capital  Stock  of  Glen- 
dale  Creamery  Co.,  called  for  at  a  meeting  of  the  Board  of  Directors  on  ^^f.  20,  iqqo,  and 
due      Mar.  22,   iqqq. 


STOCKHOLDERS 

NO.   OF 

SHARES 

AMOUNT 

NO.OF 
CERT 

AMOUNT 
RECEIVED 

L.   F. 

DATE 

Homer  Allen 
John  W.  Cooper 
M.  F.  Thompson 
T.  S.  Maynard 
R.  C.  Venable 
Chas.  M.  Stacy 

50 

100 

75 

25 

160 

100 

1250 

2500 
1875 
625 
3760 
2500 

1 
2 
3 

4 
6 
6 

1250 

2500 
1875 
625 
3750 
2500 

1 

1 
1 
1 

2 
■    2 

March    21 
21 
22 
22 
22 
23 

Totals 

500 

12600 

12600 

6. 

On  June  i,  the  directors  issued  a  call  for  another  installment  of  stock  subscriptions  to  the 
amount  of  50  per  cent,  payable  June  10,  which  installment  was  duly  paid  by  the  stockhold- 
ers. On  Oct.  15,  a  call  was  issued  for  the  third  and  final  installment  of  25  per  cent,  payable 
Oct.  20,  which  was  duly  paid,  except  the  installment  due  from  M.  F.  Thompson,  payment  of 
which  was  deferred  until  Dec.  i.  During  this  period,  and  before  the  final  installments  were 
paid,  several  transfers  of  installment  certificates  had  been  made. 

The  forms  on  page  14  illustrate  the  several  Installment  Ledger  accounts  as  they  ap- 
peared on  Nov.  I.  The  student  is  advised  to  study  each  entry  on  these  accounts,  in  connec- 
tion with  the  memoranda  of  transfers. 

Notice  that  each  account  is  debited  for  the  shares  originally  subscribed  and  for  each  in- 
stallment certificate  subsequently  issued ;  also,  that  each  account  is  credited  whenever  an  in- 
stallment is  paid  or  when  a  certificate  is  surrendered  and  cancelled. 

When  all  installments  are  paid  or  when  a  subscriber  transfers  all  his  stock,  the  account 
is  closed.     (Why  is  the  account  with  M.  F.  Thompson  not  closed?) 

The  following  are  the  transfers  of  installment  certificates  made  prior  to  the  closing  of 
the  several  accounts : 

Apr.  10,  T.  S.  Maynard  transfers  his  25  shares  to  John  W.  Cooper. 

Apr.  25,  M.  F.  Thompson  transfers  twenty  shares  to  Chas.  M.  Stacy.  Mr.  Thompson 
first  surrenders  his  installment  certificate  No.  3  (for  installment  No.  i,  75  shares)  and  has 
two  other  certificates  issued  to  him  (Nos.  8  and  9.)  He  is  first  credited  for  the  unpaid  por- 
tion of  the  shares  surrendered  (75  per  cent  of  $7500,  or  $5625.)  If  he  had  transferred  all 
his  shares,  his  account  would  now  be  in  balance,  but  as  he  wishes  to  transfer  but  twenty 
shares,  he  is  charged  for  the  unpaid  part  of  the  shares  represented  by  two  new  certificates  to 
be  issued  to  him,  one  for  twenty  and  the  other  for  fifty-five  shares.  As  he  now  transfers  the 
twenty  shares,  he  is  credited  for  the  unpaid  amount  of  these  ($2000  x  75  per  cent  or  $1500) 
and  Mr.  Stacy  to  whom  they  are  transferred  is  debited  for  them.  In  studying  these  trans- 
fers, remember  that  the  Installment  Ledger  must  show  an  entry  for  every  certificate  sur- 
rendered, transferred,  or  issued. 


14 


CORPORATION  AND  VOUCHER  ACCOUNTING. 


Installment  Ledger. 

CHAS.  M.  STACY,  Cedar  Rapids,  Iowa. 


No.  of 
Shares 

Subscribed, 

Re-Issued 

or  Transferred  by 

Per 

Cent 

Unpaid 

No.  of 
Cer. 

Amts. 
Dr. 

1 

Certificates  Sur.  or  Transferred. 

Installments  Paid 

Date 

Date 

No.  of 
Shares 

Transferred  to 
or  Sur. 

Oft 

u  6 

4^      . 

0)  o 

o  « 

0<Q 

6^ 

Amn't 
Cr. 

1900 

Mar. 
Apr. 

1 
25 

100 
20 

Subscribed 
M.F.Thompson 

100 
75 

10 

10000 
1500 

1900 
Mar. 
June 
July 
Oct. 

2S 

10 

6 

18 

20 

T.B.Spencer 

25 

10 

1 

2 

3 

100 
120 

100 

25 
60 

25 

6 
15 

23 

2500 

6000 

500 

2500 

11500 

11500 

i 

HOMER  ALLEN,  Marion,  Iowa. 


1900 



1900 

\ 

Mar. 

1 

50 

Subscribed 

100 

5000 

Mar. 

21 

1 

50 

25 

1 

1250 

Sept.  ■ 

1 

25 

Reissued 

25 

17 

625 

\June 

6 

2 

60 

50 

11 

2600 

Sept. 

1 

25 

25 

18 

625 

Sept. 
Sept. 
Oct. 

1 

1 

21 

50 
25 

Surrendered 
R.C.V  enable 

25 
25 

1-11 
17 

3 

26 

26 

H 

1250 
625 
625 

6250 

6250 

R.  C.  VENABLE,  Marion,  Iowa. 


1900 

Mar 

1 

160 

Sept. 

1 

25 

Subscribed 
Homer  Allen 


100 

26 


19 


16000 
626 


15625 


1900 
Mar. 
June 
Oct. 


17 


150\25 
150  50 


175 


26 


3750 
7600 
4376 


15625 


JOHN  W.  COOPER,  Cedar  Rapids,  Iowa. 


1900 
Mar. 
Apr. 


100 


Subscribed 
T.\S.  Maynard 


100 
76 

7 

1 

1000& 

X876 

1900 
Mar. 
June 
Oct. 

21 

7 

16 

1 1875 

1 

100 
126 
126 


12 
21 


2600 
6250 
3125 

11875 


M.  F.  THOMPSON,  Cedar  Rapids,  Iowa. 


1900 

\ 

1900 

Mar 

1 

75 

Subscribed 

100 

7500\ 

Mar. 

22 

1 

75 

26 

3 

1876 

Apr. 

26 

20 

Reissued^ 

76 

8 

1500 

Apr 

26 

75 

Surrendered 

76 

3 

5625 

Apr. 

26 

66 

75 

9 

4125 

Apr. 
June 

26 
9 

20 

Chas. M.Stacy 

76 

8 

2 

55 

60 

14 

1500 
2750 

T.  S.  MAYNARD,  Cedar  Rapids,  Iowa. 


1900 
Mar. 


25 


Subscribed 


100 

2500 

1900 

Mar. 
Apr. 

22 
10 

25 

2500 

J  ohnW. Cooper 


76 


25 


625 
1876 


2600 


T.  B.  SPENCER,   Vinton,  Iowa. 


1900 
July 


6       20    Chas.M. Stacy 


25 

16 

500 

1900 
Oct. 

16 

3 

20 

26 

20 

600 


GLENDALE  CREAMERY  CO. 


15 


July  6,  Chas.  M.  Stacy  transferred  twenty  shares  (Cer.  No.  lo)  to  T.  B.  Spencer,  Vin- 
ton, Iowa. 

Sept.  I,  Homer  Allen  transferred  twenty- five  shares  to  R.  C.  Venable. 

Whenever  a  subscriber  paid  his  final  installment  the  secretary  issued  to  him  a  stock  cer- 
tificate representing  the  total  number  of  paid  up  shares  to  which  he  was  entitled. 

The  accompanying  form  illustrates  the  certificate  for  lOO  shares  that  was  issued  to 
Chas.  M.  Stacy  when  he  paid  his  final  installment  on  Oct.  i8.  At  this  time  Mr.  Stacy's  ac- 
count in  the  Installment  Ledger  being  in  balance,  is  ruled  up  and  closed.  An  account  with 
him  is  immediately  opened  in  the  Stockholder's  Ledger,  and  he  is  credited  with  his  lOO  shares 
of  paid  up  stock. 

Form  of  Stock  Certificate. 


One 


Certificate  No. 

Par       One  Hundred       Shares 

ISSUED  TO 

Chas.  M.  Stacy, 

Cedar  Rapids,  la. 


Dated 


Oct.  18 


190  0 


FROM  WHOM  TRANSFERRKD 


Dated 


190 


No.  Orisinal 
Cerlificate 


No.  Orisinal 
Sliares 


No.  of  Shares 
Transterred 


ReceiYed   Certificate  No.     ^"^ 
for         ^^Q         Shares 

this  18th  day  of      Oct.,    190  0 
Chas.  M.  Stacy 


Glendale  Creamery  Company. 


STATE  OF: 

Capital  Stock  S  50,000.00 


Iowa 


Certificate  No. l_ 

Chas.  M.  Stacy 


This  Certifies  That_ 
is  the  owner  of     One  Hundred.>^^\y shares  of  the  Capital  Stock 
of      The  Glendale  Creamery  Company 


fully  paid,  transferable  only  on  the  Books  of  the  Corporation,  by  him  or  his 
attorney,  upon  surrender  of  this  Certificate. 

In  Witness  Whereof  the  officers  of  this  Corporation  have  hereunto  sub- 
scribed their  names  and  caused  the  Corporate  Seal  to  be  hereto  affixed  at 

Cedar  Rapids,  la.,  ^^.j^    18th  ^^^  ^f  October    ^g^  0 


T.  S.  MAYNARD, 

Secretary. 


JOHN  W.COOPER, 


President. 


7. 

The  'forms  on  page  i6  show  the  several  accounts  in  the  Stockholder's  Ledger  as  they  ap- 
peared on  March  i,  1901,  and  after  the  following  transfers  of  stock  had  been  made: — 

November  15,  T.  B.  Spencer  to  J.  M.  Stokes  of  Marion,  Iowa,  20  shares. 

December  28,  M.  F.  Thompson  to  Homer  Allen,  55  shares. 

January  25,  1901,  R.  C.  Venable  to  J.  W.  Cooper,  50  shares.  Mr.  Venable  surrenders 
his  certificate  No.  3  for  175  shares  and  has  four  other  certificates  issued,  three  for  50  shares, 
and  one  for  25,  transferring  one  of  the  former  to  Mr.  Cooper. 

8. 

On  March  i,  1901,  a  special  meeting  of  the  Board  of  Directors  was  called  to  consider 
the  finances  of  the  company.  It  was  found  that  the  available  capital  had  been  largely  ex- 
pended in  the  purchase  of  plant,  machinery,  stock,  etc.,  and  that  the  payment  of  obligations 
soon  to  mature  would  produce  a  deficit  in  the  funds.  As  it  would  be  several  months  before 
profits  would  begin  to  accrue  from  the  business,  it  was  voted  to  levy  a  cash  assessment  of 
ten  per  cent  on  the  capital  stock,  the  same  to  be  due  and  payable  on  or  before  March  15, 
1901,  and  to  be  declared  delinquent  if  not  paid  by  May  i,  1901. 

An  assessment  list  was  accordingly  made  out,  and  the  form  on  page  17  shows  this  list 
as  it  appeared  on  the  day  of  delinquency,  May  i,  1901. 


16 


CORPORATION  AND  VOUCHER  ACCOUNTING. 


Stockholders'  Ledger. 

T.  B.  SPENCER,  Vinton,  Iowa. 


SHARES  TRANSFERRED  OR  SURRENDERED 

SHARES  ISSUED,   RE-ISSUED  OR  TRANSFERRED 

Date 

No.  of 
Sh'r's. 

Transferred  to 

No.  of 
Cert. 

Amount  Dr. 

Date 

No.  of 
Shr's. 

Transferred  by 

No.  of 
Cert. 

Amount  Cr. 

1900 

Nov. 

15 

20 

J.  M.  Stokes 

1 

2000 

1900 
Oct. 

21 

20 

Issued 

1 

2000 

JOHN  W.   COOPER,  Cedar  Rapids,  Iowa. 


1900 

Oct. 

16 

125 

Issued 

2 

12500 

, 

1901 

Jan. 

25 

50 

R.  C.  Venable 

IS 

5000 

R.  C.  VENABLE,  Marion,  Iowa. 


1901 

1900 

Jan. 

25 

175 

Surrendered 

S 

17500 

Oct. 
1901 

17 

175 

Issued 

3 

17500 

25 

50 

J.  W.  Cooper 

11 

5000 

Jan. 

25 
25 
25 
25 

50 
50 
50 
25 

Re-issued 

1  :: 

9 

10 
11 
12 

5000 
5000 
5000 
2500 

CHAS.  M.  STACY,  Cedar  Rapids,  Iowa. 


1900 

Oct.  19      100      Issued 


10000 


HOMER  ALLEN,  Marion,  Iowa. 


1900 
Oct. 

21 

26 

Dec. 

28 

55 

Issued 

M.  F.  Thompson 


2500 
5500 


M.  F.  THOMPSON,   Cedar  Rapids,  Iowa. 


1900 
Dec. 


55        Homer  Allen 


1900 
5500        Dec. 


1       55      Issued 


5500 


J.  M.  STOKES,  Marion,  loiva. 


1900 

Nov. 


15 


T.B.Spencer 


2000 


GLENDAI.K  CREAMERY  CO. 


17 


Assessment  List  No.  One. 


For  Ten  (lo)  per  cent  of  the  Capital  Stock  of    the  Glendale    Creamery    Company,    levied 
March  i,  1901,  and  due  March  15,  1901.  Delinquent  May  i,  1901. 


STOCKHOLDERS 

ADDRESSES 

NO  OF 

sh'r's 

AMT.    OF 
ASSESSMENT 

AMT. 
PAID 

DATE 

REMARKS 

John  W.  Cooper 
R.  C.  Venable 

Cedar  Rapids,  la. 

175 

1750 

1760 

Mar. 

16 

Cash 

Marion,  la. 

1S5 

1250 

1250 

Mar. 

18 

Note  at  60  days 

Chas.  M.  Stacy 

Cedar  Rapids,  la. 

100 

1000 

1000 

Mar. 

14 

Cash 

Homer  Allen 

Marion,  la. 

80 

800 

800 

Mar. 

19 

Cash 

J.  M.  Stokes 

Marion,  la. 
Totals 

20 

200 

20G 

Mar. 

15 

Note  at  SO  days 

500 

5000 

5000 

Note — This  list  is  made  out  from  the  Stockholders'  Ledger,  as  it  stood  on  the  day  the  assessment  is  levied. 
Pending  the  preparation  of  an  assessment  list,  the  books  are  closed  against  stock  transfers.  At  the  time  an 
assessment  is  paid,  the  stockholder  is  given  a  receipt  for  the  amount  paid. 


The  plant  having  been  in  successful  operation  for  a  number  of  months,  the  books  were 
closed  on  Nov.  i,  1901,  when  it  was  found  that  the  net  profits  of  the  season  amounted  to 
$3256.75,  that  there  was  salable  merchandise  on  hand  to  the  amount  approximately  of  $4000, 
and  cash  in  bank,  $8600.  As  there  were  no  obligations,  the  discharge  of  which  could  not 
safely  be  met  at  maturity  by  future  receipts,  it  was  decided  that  the  conditions  warranted 
the  declaring  of  a  dividend.  Accordingly  the  directors  ordered  that  a  Cash  Dividend  of 
five  per  cent  of  the  capital  stock  be  declared,  the  same  to  be  due  and  payable  on  Nov.  15, 
1901.  Thereupon  the  bookkeeper  made  entries  in  the  Dividend  Book  as  per  the  accompany- 
ing form,  and  checks  for  the  amounts  due  were  mailed  to  the  several  stockholders. 


Dividend  Book. 


Dividend    Nov.  1,    jgoj^ 


Dividend  No. L 

Payable  Nov.  15,  iqq   1 


Per  Cent   S 


STOCKHOLDERS 

ADDRESSES 

NO.    OF 
SHARES 

AMT.   OF. 
DIVIDEND 

WHEN 
PAID 

REMARKS 

John  W.  Cooper 
K.  C.  Venable 
Chas.  M.  Stacy 
Homer  Allen 
John  M.  Stokes 

Cedar  Rapids,  la. 
Marion,  Iowa. 
Cedar  Rapids,  la. 
Marion,  la. 
Marion,  la. 

Totals 

175 

125 

100 

80 

20 

875 

625 
500 

400 

100 

Nov.          15 
Nov.          15 
Nov.          15 
Nov.          15 
Nov.          15 

Check  No.    85 

"     "         87 

88 

"      "         90 

"      "         92 

500 

2500 

Note — Dividends  may  be  paid  at  the  company's  office,  the  stockholders  appearing  personally,  receiving  their 
money,  and  receipting  for  the  same,  or,  especially  if  there  are  a  number  of  stockholders,  not  all  of  whom 
may  live  near  where  the  company's  business  is  conducted,  it  may  be  found  more  convenient  simply  to  mail  to 
each  stockholder  a  check  for  the  amount,  which,  when  endorsed  and  returned,  constitutes  a  sufficient  receipt. 
The  latter  method  is  followed  by  most  large  concerns. 


18  CORPORATION  AND  VOUCHER  ACCOUNTING. 


Entries  Required  by  Transactions  in  the  Foregoing  Memoranda. 

Entries  Required  by  Transactions  in  the  Foregoing  Memoranda. 

1.  As  the  company  at  the  time  of  its  organization  owns  no  tangible  property,  no  entry 
is  required  until  the  first  installment  is  paid.  At  this  time  entries  are  made  on  the  debit  side 
of  the  Cash  Book  for  the  several  installments  as  they  are  paid,  the  following  being  the 
form  of  entry : 

Mar.  21  Subscription 3750 

For  installment  No.  i  paid  by  Homer 
Allen  and  John  S.  Cooper  per  Install- 
ment Book  this  date. 

These  several  entries  are  then  posted  to  the  credit  of  the  Subscription  Account  in  the 
General  Ledger.  When  all  the  Installments  have  been  paid,  this  account  will  stand  credited 
with  the  full  amount  of  the  capital  stock. 

2.  When  the  final  installment  is  paid  by  a  stockholder,  and  a  stock  certificate  is  issued, 
an  entry  is  made  in  the  Journal,  debiting  Subscription  and  crediting  Capital  Stock.  The  fol- 
lowing is  the  form  of  entry  required : 

Oct.  i6  Subscription 2000 

Capital  Stock 2000 

For  20  shares  issued  to  T.  B. 
Spencer  per  Certificate  No.  2. 

When  all  the  stock  has  been  issued  and  the  several  entries  posted,  the  Subscription  Ac- 
count will  be  in  balance  and  should  be  ruled  up  and  the  Capital  Stock  Account  will  stand  cred- 
ited with  the  entire  amount  of  paid-up  stock. 

,3.  When  the  Assessments  levied  on  Mar.  5  are  paid,  Cash  is  debited  to  Assessment  No. 
I ,  as  follows : 

Mar.  15.     Assessment   No.  i  for  10  per  cent  of 1750 

175  shares  owned  by  John  W.  Cooper. 

3.  When  the  assessments  are  all  paid  and  the  payments  posted,  the  account  with  Assess- 
ment No.  I  will  stand  credited  with  the  whole  sum  levied,  or  $5000.  The  student  will  note 
that  this  account,  while  representing  a  loss  to  the  individual  stockholders,  stands  for  a  gain 
to  the  corporation,  since  it  represents  an  increase  in  the  working  capital  of  the  corporation 
for  which  there  is  no  corresponding  outlay.  Hence  in  closing  the  books,  this  account  is  prop- 
erly included  with  the  gains,  although  it  represents  an  outlay  on  the  part  of  the  individual 
stockholders,  for  which  there  is  apparently  no  return.  In  reality,  however,  this  account 
simply  stands  for  an  increase  in  the  investment  which  is  not  represented  by  a  corresponding 
enlargement  of  the  Capital  Stock.  It  is  not  really  a  loss  to  the  stockholders,  since  it,  pre- 
sumably, is  devoted  to  making  their  business  more  valuable.  Neither  is  it  really  a  gain  to 
the  business,  since  it  does  not  represent  actual  profits. 

Instead  of  levying  an  assessment  when  a  corporation  needs  an  increase  in  its  working 
capital,  it  is  now  more  usual  to  provide  for  a  further  increase  of  stock,  or  to  issue  bonds  or 
other  interest-bearing  obligations  upon  which  money  may  be  borrowed. 

When  an  increase  in  the  working  capital  is  anticipated  at  the  time  the  corporation  is 
organized,  a  certain  amount  of  the  capital  stock  is  withheld  from  subscription,  and  reserved 
as  "Treasury"  or  "Surplus"  stock,  to  be  sold  at  any  time  when  it  may  be  required  to  increase 
the  funds  of  the  company.  Should  it  not  be  found  necessary  to  sell  this  stock,  it  may  subse- 
quently be  distributed  among  the  stockholders  in  the  form  of  a  "Stock  Dividend,"  certifi- 
cates for  the  stock  being  issued,  instead  of  cash,  as  in  the  case  of  an  ordinary  dividend. 


OPENING  ENTRIES,  ETC.  19 


4.  At  the  time  the  books  are  closed  preparatory  to  declaring  the  dividend  as  ordered 
on  Nov.  I,  the  Loss  and  Gain  Account  is  closed  into  "Surplus"  and  "Dividend  No.  i,"  as 
per  the  following  Journal  Entry:— = 

Loss  and  Gain 3256.75 

Dividend  No.  i 2500.00 

Surplus . 7567s 

For  net  gains  carried  to  Surplus  and  Dividend 
No.  I,  for  5  per  cent  of  issued  stock, 
$50,000. 

When  the  dividends  are  paid  the  following  credit  entry  is  made  in  the  Cash  Book : — 

Dividend  No.  i 2500 

For  dividends  paid  as  per  Div.   Book,  page  i. 

When  the  above  entries  are  posted,  the  accounts  with  Loss  and  Gain  and  Dividend  No.  i 
will  be  in  balance  and  should  be  ruled  up,  while  the  Surplus  Account  will  represent  undistrib- 
uted profits  to  the  amount  of  $756.75,  that  may  either  be  subsequently  distributed  by  means 
of  another  dividend,  or  kept  in  reserve  to  cover  possible  losses,  etc. 

The  balance  of  the  Surplus  Account  is  treated  as  a  liability  when  the  books  are  closed.' 

Entries  for  Other   Conditions  of  Openings. 

To  the  Student.  Study  carefully  the  following  conditions  and  the  entries  given, 
after  which  write  up  the  required  entries  for  the  test  exercises  that  follow. 

Condition  Number  One. 

A  corporation  is  capitalized  for  $60,000 ;  of  this  amount  $50,000  is  subscribed  for,  and 
the  remaining  $10,000,  is  reserved  as  Treasury  Stock. 

Required  Entries.    At  the  time  the  reserve  is  made  this  entry  is  made  in  the  Journal : 

Treasury  Stock loooo" 

Capital  Stock ■  loooo 

For  amount  of  stock  reserved  to  be  disposed  of  as  future  exigencies  may  require. 

When  Treasury  Stock  is  sold,  debit  Cash  (or  whatever  is  received)  and  credit  "Treas- 
ury Stock." 

When  the  Stock  is  issued,  no  entry  is  required  in  the  Journal,  since  the  Stock  has  al- 
ready been  passed  to  the  Capital  Stock  Account. 

This  method  of  entry  will,  when  all  stock  is  issued,  leave  the  "Treasury  Stock"  ac- 
count in  balance,  and  the  "Capital  Stock"  account  credited  with  the  entire  amount  of  issue. 

The  Treasury  Stock  of  a  company  may  be  sold  for  less  or  more  than  its  face  or  "par" 
value,  according  as  its  market  price,  may  vary.  In  this  case  the  margin  of  discount  or  prem- 
ium is  carried  to  an  account  called  "Stock  Discounts  and  Premiums." 

The  following  entries  illustrate  those  required  when  Treasury  Stock  is  sold  below  or 
above  par.  ^ 

Cash 4750 

Stock  Discounts  &  Premiums 250 

Treasury  Stock 5000 

For  fifty  shares  of  Treasury  Stock  sold  this  day  at  5  per  cent  below  par,  and  issued  to 
F.  M.  Brown. 

Cash ;   2550 

Stock  Discounts  &  Premiums 50 

Treasury  Stock 2500 

For  twenty-five  shares  Treasury  Stock  sold  this  date  at  2  per  cent  above  par,  to  N.  S. 
French. 


20  CORPORATION  AND  VOUCHER  ACCOUNTING. 


Condition  No.  T-wo. 

The  printing  house  of  S.  T.  Jones  &  Co.,  that  has  been  conducted  as  a  partnership  by 
S.  T.  Jones,  James  Long  and  A.  H.  Piatt,  is  to  be  incorporated,  under  the  name  of  The  Jones 
Printing  Co.,  under  a  capitaHzation  of  $45,000,  to  consist  of  900  shares  of  $50  each. 

Of  these,  the  three  partners  are  to  receive  300  shares  each  of  paid-up  stock  for  their 
respective  interests.  The  assets  of  the  business,  as  turned  over  to  the  corporation  by  the 
partnership  are  as  follows : — 

Cash $  5000.00. 

Plant  (Presses,  Machinery,  type,  etc.) 20000.00. 

Mdse.   (Paper,  blanks,  and  other  salable  products  per  Invt.) 3528.75. 

Bills.   (Receivable  notes  rec'd.  in  settlement  of  outstanding  accounts)  .     2348.20. 


$30876.95. 

Required  Entries.  It  is  assumed  that  the  partnership  books  have  been  closed,  that 
a  satisfactory  adjustment  of  previous  gains  or  losses  has  been  effected,  that  the  books  prev- 
iously used  in  the  business  are  to  be  continued,  and  that  the  respective  partner's  accounts 
stand  credited  with  the  total  amount  of  net  capital  as  follows : 

S.  T.  Jones ..Cr.  $10756.50. 

James  Long Cr.       9873.80. 

A.  H.  Piatt Cr.     10246.65. 


$30876.95. 


The  following  entry  is  now  made  in  the  Journal : — 


S.  T.  Jones 10756.50 

James  Long 9873.80 

A.  H.  Piatt 10246.65 

Franchise 14123.05 

Capital    Stock 45000 

For  capitalization  of  Jones  Printing  Co.  as  this  day  agreed  upon,  and  as  per  closing 
statement  of  the  books  of  S.  T.  Jones  &  Co.,  for  Jan.  15,  1901.  The  above  entry,  when 
posted,  will  close  the  partner's  accounts,  and  leave  the  books  in  balance  as  follows : — 

Dr.  Cr. 

Cash 5000 

Plant 20000 

Mdse 3528.75 

Bills  Rec 2348.20 

Franchise 14123.05 

Capital    Stock 45000 

The  Franchise  Account,  as  here  employed,  shows  the  difference  between  the  actual 
working  capital  of  the  business,  and  the  Capital  Stock.  It  may  represent  that  part  of  the  con- 
cern's resources  which  is  implied  by  the  term  "good  will,"  or  it  may  stand  for  those  "future 
prospects"  which  are  assumed  to  render  the  total  value  of  the  business  greater  than  the  mere 
amount  of  its  visible  assets.  The  great  majority  of  corporations  are  capitalized  for  amounts 
much  beyond  the  inventories  of  their  working  capital,  or  assets,  and  the  Franchise  Account  is 
a  convenient  title  under  which  to  include  this  seniorage  of  capital. 

Note — ^The  Franchise  Account  is  so  called,  because  it  frequently  represents  (especially  in  street  car,  gas, 
or  other  municipal  corporations)  the  value  covered  by  a  franchise  owned  by  the  company. 


OPENING  ENTRIES,  ETC.  21 


Condition  Number  Three. 

The  hardware  business  hitherto  conducted  by  the  partnership  firm  of  Wade  &  Miller  is 
to  be  incorporated  under  the  name  of  the  Western  Hardware  Co.,  according  to  agreement 
as  follows : — 

The  capitalization  is  to  be  for  $40000,  and  to  consist  of  400  shares  of  $100  each.  J. 
H.  Wade  is  to  receive  150,  and  E,  B.  Miller  100  paid-up  shares  for  their  respective  interests 
in  the  business  to  be  incorporated.     Other  parties  subscribe  for  stock  as  follows : — 

Arthur  Nelson 50  shares. 

S.  T.  Boone 25  shares. 

S.  Lindsay 15  shares. 

P.  J.  Norman 10  shares. 

Fifty  shares  are  to  be  reserved  as  Treasury  Stock,  to  be  disposed  of  as  the  stockholders 
may  determine. 

At  the  time  of.  the  incorporation,  the  resources  and  liabilities  of  the  firm  of  Wade  & 
Miller  are  as  listed  in  the  following  statement: — 

Resources : 

Cash  on  hand  and  in  bank 2568.20 

Mdse.  per  inventory 9256.90 

Chattels  per  inventory 1562.10 

Real  Estate,  Store  Building  and  lot  (estimated) 6000,00 

Bills  Receivable 642.50 

Accounts  Receivable 2429.40 

Interest  accrued  on  accounts  and  notes 75 -OO 

Liabilities : 

Bills  payable 179. 

Accounts  Payable 1 121.40 

Interest  accrued  on  notes 25. 

J.  H.  Wade,  Partner •                12132.55 

E.  B.  Miller,  Partner 9076.15 


22534.10    22534.10 


It  is  decided  that  the  stock  subscribed  shall  be  paid  in  in  four  equal  installments  one 
month  apart,  the  first  installment  to  be  due  and  payable  immediately.  This  installment  is 
accordingly  paid  in  Cash. 

Required  Entries.     When  Wade  and  Miller  receive  their  stock  the  following  Journal 
entry  is  made : — 

J.  H.  Wade 12132.55 

,   E.   B.   Miller 9076.15 

Franchise   379I-30 

Capital    Stock.' 25000 

For  incorporation  of  Wes  tern  Hardware 

Co.  according  to  agreement  this  day  entered 

into  between  J.  H.  Wade,  E.  B. 

Miller,  Arthur    Nelson,  S.  T.  Boone,  S.  Lindsay,  and 

P.  J.  Norman,  and  in  accordance  with  an 

exhibit  of  the  books  of  the  firm  of  Wade  &  Miller  as 

shown  by  closing  statement  of  this  date. 

This  entry  closes  the  partners'  accounts,  shows  excess  of  capitalization  over  net  assets, 
and  credits  capital  stock  with  the  whole  amount  of  shares  issued. 


22  CORPORATION  AND  VOUCHER  ACCOUNTING. 

When  the  first  installment  of  this  subscribed  stock  is  paid,  debit  cash  to  subscription; 
and  when  this  stock  is  issued,  debit  Subscription  and  credit  Capital  Stock  in  the  Journal  as 
in  the  case  of  the  Glendale  Creamery  Co.,  page  i8. 

The  reserved  Treasury  Stock  is  shown  by  the  following  entry : — 

Treasury  Stock 5000 

Capital    Stock . 5000 

For  Fifty  Shares  of  Treasury  Stock  in  Western  Hardware  Co.,  which  is  reserved  for 
future  disposal  as  may  hereafter  be  decided  upon. 

Suppose  that,  after  a  time,  it  is  decided  that  the  sale  of  Treasury  Stock  is  unnecessary, 
and  the  directors  should  order  it  retired.  This  would  be  done  by  the  following  Journal 
entry : — 

Capital   Stock 5000 

Treasury  Stock 5000 

For  fifty  Shares  reserved  Treasury  Stock  retired  this  date. 

This  entry  would  close  the  account  with  Treasury  Stock,  while  the  balance  of  the  Cap- 
ital Stock  Account  would  show  the  amount  of  Capital  Stock  issued. 

Condition  Number  Four. 

Henry  Bell,  C.  W.  McCloud,  and  S.  T.  Smith  have  been  conducting  a  tanning  busi- 
ness under  the  firm  name  of  McCloud,  Bell  &  Co.  They  have  decided  to  reorganize  and  in- 
corporate their  business  under  the  following  conditions : 

The  concern  is  to  be  capitalized  for  $30000,  300  shares  of  $100  each.  The  partners  are 
to  receive  paid-up  stock  for  their  respective  interests  as  follows : 

Henry  Bell,  100  shares. 

C.   W.    McCloud,  60  shares, 
S.  T.  Smith,  40  shares. 

Of  the  remaining  capital  stock,  75  shares  are  to  be  subscribed  for  by  other  parties  and 
the  remaining  25  shares  to  be  held  in  reserve  as  Treasury  Stock.  The  corporation  is  to  be 
entitled  "The  McCloud  Tanning  Co." 

On  Jan.  10,  1901,  the  subscription  stock  has  been  subscribed  as  follows: 

* 

N.  S.  Brown,  20  shares. 

Chas.   Halloran,  25  shares. 

C.  S.  Atkins,  15  shares. 

A.  L.  McGuire,  15  shares, 
and  the  company  was  duly  organized. 

The  following  statement  of  the  transferred  assets  and  liabilities  is  submitted  and  ac- 
cepted : 

Assets : 

Plant,  machinery,  tools,  etc 6567.80 

Mdse.,  leather  and  hides  on  hand 5250 

Operating  products,  tan  bark,  fuel,  etc 1275 

Notes  Receivable 426.50 

Harmon  Leather  Co.  on  acct 397.20 

Liabilities: 

Notes  Payable i57-90 

Union  Market  Co.  on  acct 129.50 


SPECIAL  CONDITIONS  WITH  ENTRIES.  23 

On  Jan.  15,  a  cash  installment  of  25  per  cent  of  the  subscribed  stock  is  paid,  and  the 
certificates  of  stock  agreed  upon  are  issued  to  the  original  partners. 

At  this  time,  a  new  set  of  corporation  books  are  opened,  the  books  of  the  former  part- 
nership being  dispensed  with. 

On  Jan.  20,  the  remainder  of  the  stock  subscriptions  are  paid  in  cash,  with  the  excep- 
tion of  the  subscription  of  A.  L.  McGuire,  who  gives  his  note  at  60  days  with  approved  se- 
curity.   The  stock  is  issued  in  full  to  all  subscribers. 

On  Jan.  25,  the  25  shares  of  Treasury  Stock  are  sold  to  the  Union  Market  Co.,  they 
receiving  credit  for  the  amount  due  on  their  account  and  paying  cash  for  the  balance. 

On  Apr.  25,  the  concern  being  in  need  of  further  capital  to  develop  the  business,  the 
stockholders  by  mutual  agreement,  donated  20  per  cent  of  the  stock  held  by  them,  the  same 
to  be  sold  and  the  proceeds  devoted  to  the  business. 

On  May  2,  20  shares  of  the  donated  stock  were  sold  at  par  to  C.  W.  Johnson  for  cash. 

On  May  16,  10  shares  of  the  donated  stock  were  sold  at  5  per  cent  below  par  to  Arthur 
Williams,  on  his  note  at  30  days. 

R.equired  Entries. 

When  the  statement  of  assets  and  liabilities  of  the  former  partnership  is  rendered  and 
accepted  and  the  stock  issued,  the  following  entry  is  made  in  the  Journal: 

Plant    6567.80 

Mdse 5250. 

Operating   Products 1275, 

Bills   Receivable ; 426.50 

Harmon  Leather  Co 347-20 

Franchise   6420.90 

Bills   Payable I57-90 

Union  Market  Co 129.50 

Capital  Stock 20000. 

For  inventoried  assets  and  liabilities  this  day  transferred  by  the  firm  of  McCloud,  Beil 
&  Co.  to  "The  McCloud  Tanning  Co."  in  consideration  of  200  paid-up  shares  of  the  stock  of 
said  corporation  and  which  have  this  day  been  issued  as  per  agreement  to  the  members  of 
said  firm. 

In  the  foregoing  entry  no  account  is  taken  of  the  several  partners'  accounts,  since  these 
do  not  appear  in  the  corporation  books.  Notice  that  the  amount  charged  to  Franchise  is  the 
difference  between  the  sum  of  the  assets,  and  the  liabilities  plus  that  portion  of  the  Capital 
Stock  issued  to  the  former  partners. 

When  the  first  installment  is  paid,  the  following  entry  is  made  on  the  debit  side  of  the 
Cash  Book: — 

Subscription 1875 

For  cash  installment  (No.  i)  by  N.  S.  Brown,  Chas.  Hallor- 
an,  C.  S.  Atkins,  and  A.  L.  McGuire  per  entries  in  Installment 
Book,  this  date. 

The  Treasury  Stock  is  provided  for  by  the  following  Journal  entry : — 

Treasury  Stock 2500 

Capital  Stock 2500 

For  25  shares  Treasury  Stock  reserved. 

When  the  final  installment  on  the  subscribed  stock  is  paid  in,  make  debit  Cash  Book 
entry  for  portion  paid  in  cash  as  follows : — 

Subscription ,  4500 

For  Cash  installment  No.  2,  bal.  due  on  stock  subscriptions  of 
N.  S.  Brown,  Chas.  Halloran,  and  C.  S.  Atkins,  per  Installment 
Ledger  this  date. 


24  CORPORATION  AND  VOUCHER  ACCOUNTING. 

For  the  payment  of  remainder  of  A.  L.  McGuire's  subscription  with  note,  the  following 
Journal  entry  is  made : — 

Bills  Rec 1 125 

Subscription  1125 

For  Installment  No.  2,  75  per  cent  of  A.  L.  McGuire's  subscrip- 
tion of  15  shares  paid  with  his  note  of  this  date. 

Certificates  of  stock  are  then  issued  to  the  several  subscribers,  their  accounts  are  closed 
in  the  Installment  Ledger  and  opened  in  the  Stockholders'  Ledger,  and  the  following  Journal 
entry  is  made : 

Subscription  7500 

Capital  Stock 7500 

For  75  shares  of  paid-up  subscription  stock,  issued  this  day  as 
follows : — 

N.  S.  Brown,  20  shares. 

Chas.   Halloran,  25  shares. 

C.  S.  Atkins,  15  shares. 

A.  L.  McGuire,  15  shares. 

When  the  twenty-five  shares  of  Treasury  Stock  are  sold  to  the  Union  Market  Co.,  make 
the  following  Journal  entry: — 

Cash 2370.50 

Union  Market  Co 129.50 

Treasury  Stock 2500. 

For  25  Shares  Treasury  Stock  issued  this  day  to 

Union  Market  Co.  and  paid  for  with  offset  of  amount  due 

them  on  our  account,  and  cash  per  balance. 

When  the  stock  is  donated  by  the  several  stockholders,  the  following  Journal  entry  was 
made: 

Donated  Stock 6000 

Loss  and  Gain 6000 

For  20  per  cent  of  the  capital  stock  contributed  pro  rata,  by  the 
several  stockholders  and  this  day  assigned  to  the  McCloud  Tan- 
ning Co.  to  be  sold  for  the  benefit  of  the  business. 

Note — This  method  of  raising  necessary  funds  is  often  employed  instead  of  levying  an  ordinary  assess- 
ment. Like  an  assessment,  the  stock  donated  constitutes  a  clear  gain  to  the  business,  since  it  is  an  acquired 
resource  for  which  there  is  no  corresponding  outlay,  and  it  is  therefore  debited  and  Loss  and  Gain  is  cred- 
ited. It  may  be  entered  either  at  par  or  at  its  market  value.  The  Donated  Stock  Account  is  credited  when 
the  stock  is  sold,  and  since  it  may  be  sold  at  variable  prices,  the  account,  when  all  the  stock  is  sold,  may 
show  either  a  debit  or  a  credit  balance,  according  to  whether  it  was  sold  for  a  greater  or  a  less  amount 
than  that  for  which  the  account  was  originally  debited.  If  a  balance  is  shown  when  all  the  stock  is  sold,  the 
account  is  closed  into  Loss  and  Gain. 

When  the  20  shares  are  sold  to  C.  W.  Johnson,  the  following  entry  is  made  in  the  Cash 
Book  :— 

Donated   Stock 2000 

For  20  shares  sold  at  par  to  C.  W.  Johnson  as  per  Cer.  No.  9. 

When  the  10  shares  are  sold  to  Arthur  Williams,  the  following  Journal  entry  is  made: — 

Bills  Rec 950 

Donated  Stock 950 

For  10  shares  sold  at  5  per  cent  below  par  to  Arthur  Williams 
as  per  Cer.  No.  10  on  his  note  at  30  days. 


PRACTICE  EXERCISES.  25 


£,Xf:KCIS£S. 

Prepare  entries  (as  specified)  for  each  of  the  following  schemes  of  Incorporation,  re- 
ferring, if  necessary,  to  previous  instructions. 

Note — Use  loose  Journal  paper  for  the  following  exercises  and  make  no  entries  in  your  blank  books. 

Corporation  No.  1. 

The  Lawndale  Manufacturing  Co.  is  incorporated  on  Jan,  15,  1901,  for  $75000  (shares 
of  $100).     Of  this  amount  $60000  is  subscribed  as  follows: 

C.  R.  Smith,  200  shares. 

M.  Wilson,  125  shares. 

L.  W.  Neal,  1 50  shares. 

I.  N.  Thayer,  75  shares. 

A.  C.  Hill,  50  shares. 

The  remaining  150  shares  are  reserved  as  Treasury  Stock. 

The  subscription  agreement  is  signed  Jan  15. 

On  Feb.  i,  Mr.  Smith  pays  cash  for  his  stock  in  full,  and  the  remainder  of  the  stock- 
holders pay  a  cash  installment  of  75  per  cent. 

Mar.  I  they  pay  cash  for  the  remainder,  and  their  stock  is  issued. 

Apr.  15,  50  per  cent  of  the  Treasury  Stock  is  sold  at  par  for  cash  to  C.  W.  Jones. 

July  15,  the  remaining  unissued  Treasury  Stock  is  retired. 

Jan.  I,  1902,  the  books  show  net  gains  to  the  amount  of  $12569.50  from  which  a  cash 
dividend  of  ten  per  cent  is  declared  and  paid. 

Write  all  Journal  and  Cash  Book  entries  required,  with  dates  and  explanations  com- 
plete, and  close  net  gains  into  Dividend  and  Surplus  Accounts,  as  previously  instructed. 

Corporation  No.  2. 

H.  B.  Scott  has  been  conducting  a  wagon  and  buggy  inanufactory  which  is  to  be  incor- 
porated under  the  name  of  The  Scott  Wagon  &  Buggy  Co.,  as  follows : — 

Capital  Stock,  $40,000  (400  shares).  Mar.  i,  1901,  C.  F.  Miller  subscribes  100  shares, 
and  A.  B,  Clark  and  T.  M.  Cook  50  shares  each.  H.  B.  Scott  has  issued  to  him  the  remain- 
ing 200  shares  paid  up,  in  consideration  of  his  transferring  to  the  corporation  the  plant  and 
equipment  which  are  put  in  at  the  full  valuation  of  the  shares,  $20000,  and  to  be  repre- 
sented on  the  books  by  an  account  with  "Plant  and  Equipment." 

Mar.  5,  C.  F.  Miller  pays  cash  for  his  shares,  and  on  Apr.  i,  A.  B.  Clark  and  T.  M. 
Cook,  respectively,  pay  their  subscriptions,  one  half  in  cash  and  their  notes  at  90  days  for 
the  balance. 

July  I,  the  stockholders  donate  10  per  cent  of  their  stock  to  be  sold  for  the  purpose  of 
increasing  the  working  capital. 

July  15,  40  per  cent  of  the  donated  stock  is  sold  at  par  to  R.  B.  Bryan  for  cash. 

Aug.  I,  the  remainder  of  the  donated  stock  is  sold  to  A,  P.  Lane,  at  5  per  cent  above 
par.     Mr.  Lane  pays  $2000  in  cash  and  his  note  at  30  days  for  balance. 

Dec.  I,  the  business  shows  a  net  profit  of  $3241.50,  from  which  a  cash  dividend  of  five 
per  cent  is  declared  and  paid. 

Make  complete  Journal  and  Cash  Book  entries  for  all  transactions  and  closings. 


26  CORPORATION  AND  VOUCHER  ACCOUNTING. 

Corporation  No.  3. 

S.  B.  Marvin,  L.  Seymour  and  R.  W.  Evans  have  been  conducting  a  grocery  business 
under  the  firm  name  of  S.  B.  Marvin  &  Co.  They  decide  to  incorporate  the  business  under  a 
capitalization  of  $30000,  (600  shares  of  $50  each.)  The  corporation  to  be  known  as  "The 
Western  Grocery  Co." 

For  their  present  interest  in  the  business,  the  partners  are  to  receive  stock  as  fol- 
lows : — 

S.  B.  Marvin,  150  shares. 

L.  Seymour,  175  shares. 

R.  W.  Evans,  75  shares. 

One  hundred  shares  are  to  be  taken  by  A.  B.  Snow  and  to  be  paid  for  in  Cash,  and  the 
remaining  one  hundred  shares  are  to  be  reserved  as  Treasury  Stock. 

The  above  arrangement  was  effected  and  the  shares  issued  May  i,  1901,  and  on  this 
date  the  books  of  the  partnership  were  closed,  and  then  re-opened  under  the  incorporation 
in  accordance  with  the  following  statement: — 

RESOURCES. 

Cash 1565.20 

Mdse.  (Invt.  stock  on  hand) 8592.40 

Personal  Accounts  (per  schedule) 4221.60 

Bills  Receivable  (notes  on  hand) 2567.25 

Chattels  &  Fixtures  (Invt.) 759-20 

LIABILITIES. 

Per.   Accts 657.40 

Bills  Payable  (notes  and  acceptances) 540-55 

L.  Seymour,  Partner 6621.25 

S.  B.  Marvin,  Partner 6564.30 

R.  W.  Evans,  Partner 3322.15 


17705.65     17705-65 

July  I,  one  half  of  the  Treasury  Stock  is  sold  at  par  for  cash  to  Henry  Warner. 

Aug.  I,  30  shares  of  Treasury  Stock  are  sold  for  cash  at  2  per  cent  below  par  to  Chas. 
Morton. 

Sept.  15,  the  remainder  of  the  Treasury  Stock  is  sold  at  5  per  cent  premium  to  T.  S. 
Brown,  on  his  note  at  60  days. 

Jan.  I,  1902,  the  books  of  the  concern  show  a  net  gain  of  $3327.40  which  is  closed  into 
Surplus,  and  a  cash  dividend  of  5  per  cent  is  declared  and  paid. 

Mar.  I,  1902,  a  second  dividend  of  6  per  cent  is  declared  and  paid  in  cash. 

Give  all  Cash  Book  and  Journal  entries  required  to  open  the  corporation  books,  also 
those  relating  to  the  treasury  stock  and  to  the  dividends. 


GENERAL  REVIEW.  27 


General  Revie'w  Quiz. 

To  the  Student:  Prepare  yourself  to  answer  fully  all  the  following  questions.  See 
how  many  you  can  answer  without  re-reading  any  of  your  previous  instructions.  If,  how- 
ever, you  are  in  doubt  as  to  the  correct  answer  to  any  question,  refer  to  the  text  again  and 
study  the  matter  carefully. 

When  you  feel  that  you  are  prepared  to  answer  all  the  questions,  report  to  your  teacher 
who,  if  he  is  satisfied  that  you  are  ready  to  proceed  with  the  actual  accounting  course,  will 
direct  you  to  commence  with  the  work  of  the  Central  Canning  and  Drying  Co.,  page  29. 

1.  Define  a  corporation. 

2.  What  is  a  charter? 

3.  What  constitutes  the  charter  of  an  ordinary  commercial  corporation? 

4.  Give  an  example  of  a  public  corporation. 

5.  Name  the  three  classes  of  private  corporations. 

6.  How  are  the  powers  and  liabilities  of  corporations  regulated  ? 

7.  Define  corporation  stock. 

8.  What  is  a  stock  subscription  agreement?.    What  should  it  set  forth? 

9.  What  is  a  promoter? 

10.  What  is  the  purpose  of  a  minute  book,  and  by  whom  is  it  usually  kept? 

11.  How  is  the  correctness  of  minutes  verified? 

12.  May  a  company  be  formally  organized  before  all  the  stock  is  subscribed? 

13.  What  general  facts  should  be  set  forth  by  the  articles  of  incorporation? 

14.  What  procedure  is  usually  necessary  to  give  a  corporation  legal  existence? 

15.  Name  the  general  powers  usual  to  corporations. 

16.  Explain  the  voting  rights  of  incorporators. 

17.  Name  the  usual  liabilities  of  corporations  and  their  stockholders. 

18.  With  respect  to  the  liability  of  stockholders,  corporations  are  divided  into  what 
three  classes?    Define  each. 

19.  What  are  dividends,  and  how  are  they  distributed? 

20.  What  are  assessments,  and  under  what  circumstances  are  they  usually  levied? 

21.  What  is  an  installment? 

22.  Should  a  stockholder  fail  to  pay  an  installment,  what  procedure  may  be  taken? 

23.  What  do  you  understand  by  common  stock?  Preferred  stock?  Guaranteed 
stock  ?    Donated  stock  ? 

24.  What  class  of  stock  usually  has  the  most  stable  valuation  ?    Why  ? 

25.  What  is  a  franchise?     Give  an  example.  J 

26.  What  is  a  bonus? 

2^.     What  are  bonds ?    Securities? 

28.  Explain  the  meaning  of  the  word  "fund"  as  used  in  corporation  affairs. 

29.  Distinguish  between  "close"  and  "open"  corporations. 

30.  The  books  required  to  be  kept  in  corporation  business  are  divided  into  what  two 
general  groups? 

31.  What  is  the  purpose  of  an  installment  book? 

32.  Under  what  circumstances  in  the  formation  of  a  corporation  would  stock  subscrip- 
tion and  installment  books  be  required?  When  would  special  stock  subscription 
and  installment  books  be  unnecessar)'- ? 

33.  What  is  meant  by  installment  scrip? 

34.  What  does  the  debit  side  of  the  Installment  Ledger  show?     The  credit  side? 

35.  What  procedure  is  taken  when  a  stockholder  makes  a  final  payment  of  his  stock 
subscription  ? 

2.6.  Under  what  circumstances' would  an  account  in  the  Installment  Ledger  be  closed? 

2.7.  What  is  a  stock  certificate? 

38.  When  should  an  account  be  opened  in  the  Stockholders'  Ledger  ?    When  closed  ? 

39.  What  procedure  is  necessary  when  an  installment  certificate  is  transferred?  When 
a  stock  certificate  is  transferred? 


28  CORPORATION  AND  VOUCHER  ACCOUNTING. 

40.  What  should  the  balance  of  an  account  in  the  Stockholders'  Ledger  always  show  ? 

41.  If  a  stockholder  transfers  an  installment  certificate,  does  he  escape  liability  for  the 
remainder  of  his  stock  subscriptions? 

42.  May  a  stockholder  escape  liability  for  corporation  debts  by  selling  or  transferring 
his  stock  certificates? 

43.  By  whom  are  corjporation   by-laws  usually  adopted? 

44.  Under  what  circumstances  may  the  books    be    temporarily    closed    against    stock 
transfers  ?    Why  is  this  necessary  ? 

45.  If  a  stockholder  fails  to  pay  an  assessment,  what  procedure  may  be  taken? 

46.  How  are  stockholders  usually  notified  that  an  assessment  has  been  levied? 

47.  Under  what  circumstances  and  by  whom  may  dividends  be  declared? 

48.  Describe  the  procedure  necessary  when  a  dividend  is  to  be  declared  ? 

49.  What  disposition  is  usually  made  of  treasury  stock  that  is  not  to  be  sold  for  the 
benefit  of  the  corporation? 

50.  How  is  a  stock  subscription  agreement  usually  certified? 

51.  What  officials  usually  have  the  management  of  the  corporation  affairs?     How  is 
their  authority  limited? 

52.  How  can  a  stockholder  transfer  a  portion  of  the  shares  represented  by  a  stock  cer- 
tificate ? 

53.  When  does  the  installment  ledger  cease  to  be  active? 

54.  How  do  corporations  usually  raise  needed  money,  in  case  it  is  not  desirable  to  levy 
an  assessment? 

55.  What  is  the  purpose  of  the  "Surplus"  or  "Reserve"  Fund?    Does  it  represent  a  re- 
source or  a  liability  on  the  books  ? 

56.  How  are  dividends  usually  paid? 

57.  What  entry  is  made  when  a  cash  payment  is  made  on  a  stock  subscription? 

58.  What  does  the  Subscription  Account  represent?    When  is  it  finally  closed? 

59.  Should  an  assessment  account  be  treated  as  a  loss  or  a  gain,  when  the  books  are 
closed  ? 

60.  For  what  purpose  is  treasury  stock  usually  reserved  when  the  corporation  is  or- 
ganized. 

61.  When  a  cash  dividend  has  been  declared,  what  entry  should  be  made? 

62.  What  entry  is  made  when  dividends  are  paid  in  cash? 

63.  When  would  a  dividend  account  be  in  balance? 

64.  What  entry  should  be  made  when  $25000  in  Treasury  Stock  is  reserved?     When 
it  is  sold  for  cash  at  2  per  cent  below  par  ?    At  5  per  cent  above  par  ? 

65.  What  entry  is  made  when  Treasury  Stock  is  retired? 

66.  What  is  the  purpose  of  the  Franchise  Account  ? 

67.  When  a  partnership  is  incorporated,  partners'  accounts  are  closed  into  what  ac- 
count ? 

68.  When  an  installment  is  paid  by  note,  what  entry  should  be  made? 

69.  When  the  incorporators  contribute  their  own  stock  to  be  sold  for  the  benefit  of  the 
business,  what  entry  is  required? 

70.  Suppose  the  second  dividend  declared  by  the  company  were  made  payable  in  treas- 
ury stock,  what  entry  would  be  required? 


ORGANIZATION  C.  C.  &  D.  CO.  29 

Organization  and    Business    Transactions    of   the    Central  Canning 

and  Drying  Company. 

To  tile  Student:  In  this  course  of  practice  in  corporation  bookkeeping,  it  is  as- 
sumed that  the  firm  of  Douglas,  Fenton  &  Co.  have  been  conducting  a  canning  and  drying 
business  at  Hillsdale,  O.,  and  in  order  to  enlarge  their  capital  and  further  develop  their  busi- 
ness, have  decided  to  incorporate  under  the  name  of  The  Central  Canning  and  Drying  Co., 
which  concern  is  to  be  organized  and  conducted  as  set  forth  in  the  memoranda  that  follows. 
It  is  also  assumed  that  you  are  to  act  as  Secretary  and  bookkeeper  for  the  company. 

The  various  books  and  accounting  methods  to  be  employed  will  be  described  and  illus- 
trated as  they  are  required.  You  are  to  be  a  subscriber  for  125  shares  of  the  corporation 
stock,  and  you  are  to  use  your  own  name  in  all  entries,  etc.,  where  the  word  "student"  is 
used. 

Memoranda  {^Be ginning  July  i,  igoi.) 

An  informal  preliminary  meeting  of  the  proposed  incorporators  is  held  at  the  office  of 
Douglas,  Fenton  &  Co.  Present :  Chas.  T.  Fenton,  James  Douglas,  Geo.  P.  Morton,  A.  F. 
Hanlon,  L.  M.  Barnes,  and  Student. 

Mr.  Fenton  is  chosen  temporary  chairman,  and  Student,  Secretary. 

General  and  informal  discussion  of  plans  for  forming  corporation. 

Motion  by  Mr.  Douglas  that  a  committee  of  three  be  appointed  by  the  chairman  to  pre- 
pare plan  of  proposed  organization,  said  committee  to  render  its  report  to  the  proposed  in- 
corporators at  a  meeting  to  be  held  July  6,  at  7  130  p.  m.  Motion  carried  unanimously.  Chair- 
man appoints  the  following  persons  to  serve  on  said  committee:  James  Douglas,  Geo.  P. 
Morton,  and  Student.    Meeting  adjourned  to  meet  at  same  place,  July  6,  at  7  130  p.  m. 

Write  in  your  Minute  Book,  in  due  form,  the  minutes  of  this  meeting. 

July  6. 

Meeting  to  hear  report  of  committee  on  organization.  This  report,  as  submitted  and 
adopted  by  vote,  is  as  follows :  "^ 

1.  That  a  corporation  is  to  be  formed  under  the  laws  of  the  State  of  Ohio,  and  to  be 
known  as  "The  Central  Canning  and  Drying  Company,"  the  business  of  which  is  to  be  the 
canning,  drying,  or  otherwise  preserving  of  fruits,  vegetables,  meats,  or  other  food  products. 

2.  That  the  company  is  to  be  capitalized  for  $250,000  in  shares  of  $100  each. 

3.  That  $200,000  of  the  stock  is  to  be  subscribed  for  at  once,  and  $50,000  to  be  re- 
served as  Treasury  stock  and  sold  hereafter,  or  retired,  as  may  be  determined  by  the  man- 
agement. 

4.  That  $100,000  of  paid-up  shares  are  to  be  issued  to  the  members  of  the  firm  of 
Douglas,  Fenton  &  Co.  of  Hillsdale,  Ohio,  as  follows: 

Chas.  T.  Fenton,       375  shares. 

James  Douglas,         250  shares. 

A.  F.  Hanlon,  250  shares. 

L.  M.  Barnes,  125  shares. 

These  shares  are  to  be  issued  to  said  persons  as  a  full  equivalent  for  their  respective  in- 
terests in  the  common  property  and  business  belonging  to  said  firm,  located  at  Hillsdale, 
Ohio,  and  which,  ?fter  its  organization,  is  to  belong  to  the  Central  Canning  and  Drying  Co. 

5.  That  upon  the  subscription  of  the  remaining  $100,000  of  the  capital  stock  by  re- 
sponsible persons,  the  incorporators  here  present,  bind  themselves  to  the  formation  of  the 
proposed  incorporation  in  accordance  with  the  terms  herein  set  forth. 

After  some  general  discussion,  the  report  of  the  committee,  as  above  outlined,  was 
ladopted  by  unanimous  vote. 

The  Secretary  was  then,  on  motion,  instructed  to  draw  up  a  stock  subscription  agree- 
ment in  accordance  with  the  for.egoing  terms,  and  a  committee  consisting  of  Geo.  P.  Morton 
and  L.  M.  Barnes  was  appointed  by  the  chair  to  circulate  this  subscription  agreement  for  the 
purpose  of  securing  the  required  subscribers  for  the  proposed  capital  stock.  Meeting  then 
adjourned  subject  to  the  call  of  the  chairman. 


30  CORPORATION  AND  VOUCHER  ACCOUNTING. 

Write  up  the  minutes  foi  this  meeting,  which  should  include  a  full  and  formal  report 
of  the  committee.     Sec  page  9. 

Draw  up  the  Stock  Subscription  Agreement,  and  subscribe  your  own  name,  after  whic:i 
your  teacher  will  have  the  remaining  signatures  attached,  which  represent  the  persons, 
whom  it  will  be  assumed  have  duly  subscribed  for  the  number  of  shares  set  opposite  their 
names.     For  form  of  Agreement  see  Note,  page  10. 

Student,    125   shares.  Henry  T.  Bell,  7^  shares. 

Geo.  P.  Mortoi',  200  shares.  Arthur  Moore,  250  shares, 

J.  S.  Miller,  100  shares.  E.  P.  Moody,  175  shares. 

John  A.  Martin,  75  shares. 

July  12. 

The  canvassing  committee  having  reported  that  the  required  stock  subscriptions  had  been 
obtained,  the  Chairman  called  a  meeting  of  the  incorporators  to  take  steps  for  the  legal  for- 
mation of  the  coiporation. 

After  some  general  discussion,  the  Secretary  was  directed  to  draw  up  Articles  of  In- 
corporation in  accordance  with  the  terms  already  agreed  upon,  adding  such  other  details  as 
might  be  necessary  and  submit  the  same  for  adoption  by  the  incorporators. 

The  following  officers  were  then  elected  for  the  first  official  term,  beginning  with  the 
formation  of  the  corporation  and  ending  July   i,  1902 : 

President^ — A.  F.  Hanlon. 

Vice  President — Geo.  P.  Morton. 

Secretary — Student. 

Treasurer — James  Douglas. 

Directors — A.  F.  Hanlon,  Geo.  P.  Morton,  Arthur  Moore,  James  Douglas  and  Student. 

Meeting  then  adjourned  to  re-convene  at  the  same  place  on  July  15  at  7:30  p.  m. 

Write  the  minutes  for  this  meeting,  after  which,  prepare  Articles  of  Incorporation  fol- 
lowing in  a  general  way  the  form  given  on  page  10,  but  observing  the  terms  as  agreed  upon 
and  set  forth  in  the  minutes.  Fix  the  time  of  incorporation  at  twenty-five  years,  and  the 
place  of  business,  Hillsdale,  Ohio.  -  After  preparing  the  Articles  of  Incorporation,  submit 
the  document  to  your  teacher  for  inspection,  who  will  have  affixed  the  signatures  of  the  in- 
corporators. 

Note — In  the  case  of  an  actual  corporation,  it  would  now  be  necessary  to  forward  the  Articles  of  Incor- 
poration to  the  Secretary  of  State  for  registry,  and  perhaps  also  to  the  Clerk,  or  Recorder,  of  the  counjy  in 
which  the  incorporation  "is  formed.  In  the  case  of  your  present  work,  it  will  be  assumed  that  this  has  been 
done,  and  that  the  necessary  fees  have  been  paid  personally  by  the  Secretary.  An  itemized  list  of  these  pre- 
liminary expenses  will  be  given  later. 

July  20. 

The  corporation  having  received  its  charter  (the  Articles  of  Incorporation  as  returned 
with  the  Certificate  of  Registry  by  the  Secretary  of  State)  and  having  therefore  attained  to 
a  legal  existence,  a  meeting  of  the  Board  of  Directors  was  held  at  which  the  following  busi- 
ness was  transacted : 

1.  The  Board  was  organized  by  the  election  of  A.  F.  Hanlon  as  President  and  Student 
as  Secretary. 

Note — The  president  and  secretary  of  a  corporation  usually  serve,  respectively,  as  president  and  secre- 
tary of  the  Board  of  Directors. 

2.  A  committee,  consisting  of  James  Douglas,  Geo.  P.  Morton,  and  the  student,  was 
appointed  to  draft  By-Laws  for  the  government  of  the  corporation. 

3.  It  was  voted  to  call  for  the  immediate  payment  in  cash  of  an  installment  of  twenty- 
five  per  cent  of  the  subscribed  stock. 

4.  The  Secretary  was  directed  to  issue  certificates  of  stock  to  all  persons  entitled  to  the 
same,  as  required  by  the  Stock  Subscription  Agreement,  also  to  secure  and  open  a  set  of  cor- 
poration books. 

5.  The  following  employes  were  elected,  with  salaries  as  specified : 
Superintendent,  L.  M.  Barnes,  salary  $2,500  per  year. 
Secretary  and  Accountant,  Student,  salary  $2,000  per  year. 
Auditor  and  Treasurer,  James  Douglas,  salary  $2,000  per  year. 
Time  Keeper  .and  Clerk,  J.  M.  Davis,             salary  $1,500  per  year. 


VOUCHER  SYSTEM.  31 


Buyer,  E.  P.  Moody,  salary  $2,000  per  year. 

John  A.  Martin,  Traveling  Salesman,  salary  $1,500  per  year. 

Charles  Baker,  Traveling  Salesman,  salary  $1,500  per  year. 

A.  W.  Long,  Traveling  Salesman,  salary  $1,200  per  year. 

Meeting  adjourned  subject  to  call  of  chairman. 

Write  up,  in  due  form,  the  minutes  of  this  meeting,  after  which  make  out  the  required 
stock  certificates  for  each  of  the  stockholders,  who  are  entitled  to  receive  paid  up  stock,  and 
deliver  the  same,  through  the  envelope  marked  "Stock  Certificates  Delivered." 

Open  accounts  in  the  Stockholders'  Ledger  with  these  stockholders,  crediting  each  with 
the  number  and  amount  of  shares  issued.  Index  these  accounts  at  the  time  you  open  them. 
For  form  of  stock  certificate  and  Stockholders'  Ledger  see  pages  15  and  16. 

The  Operating  Books  of  the  Central  Canning  and  Drying  Co. 

The  operating  books  for  this  business  include  a  Journal,  Sales  Journal,  Cash  Book, 
Voucher  Payable  Register,  Petty  Expense  Book,  General  Ledger,  and  Sales  Ledger. 

The  first  four  of  these  are  what  are  known  as  "special  column  books"  and  are  adapted 
to  the  peculiar  requirements  of  this  business.  The  student  should  bear  in  mind  that  all  large 
business  concerns  adopt  methods  of  account-keeping  and  the  forms  and  kinds  of  record  books 
that  are  best  adapted  to  the  special  requirements  of  their  own'business.  One  of  the  purposes 
of  the  present  course  is  to  familiarize  the  student  with  the  more  usual  methods  by  which  this 
is  accomplished. 

The  following  pages  include  forms  and  descriptions  of  the  operating  books  to  be  used. 
You  will  study  these  books  and  their  descriptions  only  as  you  are  directed  to  do  so  in  the 
memoranda  of  transactions,  which  are  continued  on  page  40,  and  to  which  you  will  now  re- 
fer for  a  continuation  of  your  work. 

The  Voucher  System  of  Accountancy. 

This  is  a  system  that  has  come  into  use  in  recent  years,  and  is  particularly  adapted  to 
large  industrial  and  manufacturing  concerns,   electric  lighting  and  street  car  plants,  etc. 

It  derives  its  name  from  the  fact  that  accounts  with  certain  classes  of  creditors  are  kept 
by  means  of  receipted  records  called  Vouchers^  used  in  connection  with  a  specially  ruled 
book  called  a  Voucher  Payable  Register.  When  pa)^ments  are  made  on  account  of  purchases 
■or  other  expenditures,  a  voucher  is  issued  and  delivered  to  the  person  or  firm  to  whom  pay- 
ments are  made,  together  with  the  cash,  check,  note,  draft,  acceptance,  or  other  instrument 
through  which  the  payment  is  made.  The  voucher  is  afterward  signed  and  returned  by  the 
person  or  firm  receiving  the  payment,  and  is  placed  on  file  as  an  evidence  of  such  payment,  as 
well  as  a  memorandum  of  the  expenditure. 

The  form  of  voucher  illustrated  on  page  32  shows  that  the  Central  Canning  and  Dry- 
ing Co.  has  purchased  of  the  Cleveland  Fruit  Co.  185  bushels  of  peaches  on  Aug.  20,  1901, 
for  which  cash  payment  was  made  Aug.  24,    1901. 

The  purpose  of  the  stub  is  to  preserve  a  record  of  the  Voucher,  should  it  be  lost  or  not 
returned  by  the  payee ;  also,  to  show  the  distribution  of  the  amount  paid  among  the  several 
department  accounts,  for  entry  in  the  Voucher  Payable  Register.  By  some  concerns  these 
•entries  are  made  on  the  back  of  the  voucher,  and  by  others  they  are  not  made  at  all,  the 
Voucher  Register  record  being  deemed  sufficient.  The  use  of  the  stub  is  more  convenient, 
however,  if  the  itemized  records  on  the  voucher  are  considered  necessary. 

When  goods  are  purchased  on  account,  the  voucher  is  duly  made  out,  but  is  not  de- 
tached from  the  stub  and  delivered  for  signature  until  payment  is  made. 

In  case  the  invoice  includes  a  large  number  of  items,  these  are  not  entered  on  the 
voucher,  but  the  amount  only  is  recorded  with  an  entry  in  the  description  column,  "As  per 
Invoice  No.  17,  rendered  Jan.  10,  1901." 

Some  concerns  use  vouchers  for  practically  all  expenditures  required  in  the  business, 
■others  use  them  only  for  certain  classes  of  payments,  as  for  material  purchased  for  use  in 
manufacturing  processes,  etc.,  and  the  cost  of  which  it  is  desirable  to  keep  in  separate  ac- 
counts. Vouchers  are  used  either  for  cash  or  time  purchases;  if  for  the  latter,  the  voucher 
is  usually  made  out  at  the  time  the  goods  are  received,  and  the  bill  verified,  but  is  not  for- 
warded to  the  creditor  until  the  time  of  payment.  In  your  present  business,  you  will  use 
-vouchers  for  all  purchases  of  material,  also  for  other  classes  of  expenditure  as  indicated  in 
:the  memoranda. 


32 


CORPORATION  AND  VOUCHER  ACCOUNTING. 


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OPERATING  BOOKS. 


33 


JOURNAL. 


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34 


CORPORATION  AND  VOUCHER  ACCOUNTING. 


VOUCHER  PAYABLE  REGISTER.-LEFT  FOLIO. 


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Voucher  Payable  Register. 

This  book  contains  a  properly  classified  record  of  all  payments 'evidenced  by  the  vouch- 
ers. There  are  special  columns  for  the  various  classes  of  materials  purchased,  also  columns 
for  Labor,  Fuel,  General  Expense,  or  any  other  classes  of  expenditures  of  which  it  is  desir- 
able to  keep  separate  records. 

The  accompanying  form  of  Voucher  Payable  Register  is  especially  adapted  to  the  busi- 
ness that  is  carried  on  by  the  student  in  the  present  course,  but  it  must  be  borne  in  mind 
that  the  form  of  the  book,  the  number  of  .columns,  etc.,  would  vary  with  the  nature  and  ac- 
countancy requirements  of  the  business. 

The  columns  under  "Canned  Goods  Accounts"  present  four  accounts  which  are  to  be 
kept  in  the  General  Ledger,  and  which  may  be  designated  "C.  G.  Raw  Products,"  "C.  G. 
Labor,"  etc.,  to  distinguish  them  from  the  corresponding  accounts  of  the  Dried  Fruit  Depart- 
ment. The  totals  of  the  several  money  columns  are  forwarded  to  the  next  page  as  soon  as 
any  page  is  full.  Periodically  (usually  at  the  end  of  each  month)  the  totals  are  posted  to  the 
Ledger. 

The  purpose  in  keeping  these  several  accounts  is  to  enable  the  management  to  know  at 
any  time  the  total  cost  of  each  department  of  the  business,  which  knowledge  may  enable  them 
to  reduce  cost  of  production.  In  large  concerns  where  there  are  many  departments  of  cost 
and  finished  product,  it  is  usual  to  keep  separate  ledgers  for  the  different  departments,  but  in 
your  present  business,  it  will  be  sufficient  to  keep  separate  cost  accounts  in  the  General 
Ledger,-  and  close  these  into  the  general  department  account. 

Instructions  will  be  given  hereafter  as  to  the  manner  of  making  these  closings  and  in- 
ventories. 


OPERATING  BOOKS. 


35 


VOUCHER  PAYABLE  REGISTER. -RIGHT  FOLIO. 


Canned  Qoods  Accounts                 I>/?-\ 

0/?/ED  f/?o/T Accou/vrs          -^'^■\      (?£^B/?fjL  Accounts                 S>/?. 

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As  your  course  does  not  involve  the  use  of  business  papers  other  than  the  vouchers  and 
invoices,  you  will  not  make  out  the  checks  that  should  accompany  the  vouchers,  but  will 
merely  assume  that  they  have  been  duly  made  out  and  delivered  with  the  voucher.  In  actual 
business,  of  course,  the  check  would  eventually  be  returned  by  the  bank  upon  which  it  was 
drawn,  while  the  voucher  would  be  receipted  and  returned  by  the  firm  to  whom  it  was  issued. 

Disposal  of  Vouchers.  When  a  voucher  is  received  by  a  payee,  if  the  check  or 
other  remittance  accompanying  it  be  correct,  the  check  should  at  once  be  deposited  for  col- 
lection, and  the  voucher  should  be  filled  out  properly  and  returned  to  the  firm  that  issued  it. 
When  a  receipted  voucher  is  received,  it  is  at  once  placed  on  file. 

Note — In  some  offices,  when  the  check  used  to  pay  a  voucher  is  returned  by  the  bank,  it  is  attached  to 
the  voucher  and  filed  with  it.  We  do  not  see,  however,  that  this  course  is  necessary,  and  so  far  as  our  in- 
vestigations extend,  but  few  houses  follow  it.  The  voucher  itself  is  a  sufficient  receipt,  and  it  seems  unneces- 
sary to  interfere  with  the  usual  order  of  disposing  of  returned  checks. 

In  your  present  work,  as  you  are  not  dealing  directly  with  real  persons,  you  may  simply 
make  out  the  voucher  in  proper  form  (using  the  book  of  vouchers  included  with  your  office 
stationery)  and  deliver  it  through  the  envelope  marked  "Vouchers  Payable  Delivered."  Your 
teacher  will  instruct  you  as  to  the  final  disposal  of  these  vouchers  at  the  end  of  the  week's 
business.  In  actual  business  they  would  be  receipted  and  returned  by  the  parties  to  whom 
they  are  issued,  and  then  re-attached  to  their  original  stubs. 


36  CORPORATION  AND  VOUCHER  ACCOUNTING. 

The  Journal. 

The  form  on  page  33  illustrates  the  Journal  that  is  to  be  used  in  this  course,  and  the 
method  of  using  it.  The  form  differs  from  that  of  the  ordinary  Journal,  only  in  the  intro- 
duction of  the  column  for  Sales  Ledger  Credits. 

Sales  Lredger  Credits  Column.  In  this  business,  a  separate  ledger  called  a 
"Sales  Ledger"  is  to  be  kept  for  all  our"  accounts  with  customers.  To  enable  us  to  know  at 
any  time  the  state  of  this  Ledger  as  a  whole,  we  carry  special  columns  in  the  several  books, 
for  the  debits  or  credits  that  go  to  this  ledger,  and  keep  a  "Sales  Ledger  Account"  in  the 
General  Ledger,  to  which  the  footings  of  the  Sales  Ledger  Columns  are  posted  at  the  close 
of  each  week.  The  "Sales  Ledger  Credits"  column  in  the  Journal  is  for  any  credits  other 
than  cash  (such  as  notes,  memoranda  of  credit,  or  the  like)  and  which  are  not  recorded  in 
the  other  books. 

Recording  Sales  of  Merchandise. 

Duplicate  Bill  Pad.  In  this  business,  the  Sales  Book  is  dispensed  with,  the  item- 
ized records  of  sales  being  kept  in  duplicates  of  the  bills  sent  to  the  customers.  This  is  done 
by  means  of  a  specially  prepared  bill  pad  with  carbon  copying  sheet.  In  preparing  duplicate 
bills,  follow  the  directions  on  the  cover  of  your  Duplicate  Bill  Pad. 

Sales  Journal.  This  book  contains  columns  for  the  names  and  addresses  of  all  per- 
sons to  whom  goods  are  sold,  and  whose  accounts  are  to  be  kept  in  the  Sales  Ledger,  also 
columns  for  the  date,  terms,  amounts,  etc.  Separate  columns  are  used  for  "Canned  Goods" 
and  "Dried  Fruit."  The  "Sales  Ledger  Debits"  column  is  for  the  amounts  of  the  several 
purchases,  and  at  the  end  of  each  week  its  total  is  posted  to  the  debit  side  of  the  Sales 
Ledger  Account  in  the  General  Ledger.  The  totals  of  the  "Canned  Goods"  and  "Dried 
Fruits"  columns  are  posted  to  the  credit  side  of  the  respective  accounts  in  the  General 
Ledger. 

The  separate  amounts  in  the  "Sales  Ledger  Debits"  column  are  posted  to  the  customers' 
accounts  in  the  Sales  Ledger.     See  page  37. 

The  Quotation  Lists.  The  output,  or  product,  of  manufacturing  establishments 
is  usually  sold  to  large  wholesalers  or  to  jobbers,  who  in  turn  sell  the  goods  to  local  dealers. 
The  prices  and  terms  will  vary  with  the  quantity  purchased,  the  rise  and  fall  of  the  market, 
etc. 

In  the  present  business,  the  manufactured  product  consists  of  various  brands  of  canned 
and  dried  fruits,  jams,  jellies,  etc.,  which  are  designated  in  the  Quotation  Lists,  and  which  are 
to  be  sold  at  the  prices  and  terms  given  unless  otherwise  specified  in  the  memoranda.  Two 
cards — "Quotation  List  No.  i"  and  "Quotation  List  No.  2" — will  be  found  in  your  book- 
keeping equipment.  The  first  of  these  is  to  be  used  until  its  use  is  discontinued  and  "Quo- 
tation List  No.  2"  is  substituted  for  it,  as  directed  in  the  memoranda.  "Canned  Goods" 
includes  the  several  brands  of  canned  fruits  and  vegetables,  jams,  jellies,  etc.,  while  the  two 
grades  of  dried  apples,  pears,  and  peaches,  are  included  under  "Dried  Fruits."  In  using  the 
Quotation  Lists,  take  extreme  care  to  enter  the  proper  prices  and  articles  as  required  by  the 
memoranda. 

Ternas  of  Sale.  Most  of  the  sales  in  this  business  are  made  at  "list  terms,"  that  is, 
on  60  days  credit  at  the  prices  given  on  the  Quotation  List,  with  a  discount  of  2  per  cent  off 
for  Canned  Goods  and  i  per  cent  for  Dried  Fruit,  provided  the  purchases  are  paid  for  in 
cash,  or  its  equivalent,  within  30  days.  Other  sales,  however,  are  made  at  special  terms  and 
prices.  The  terms  of  sale  should  always  be  entered  plainly  in  the  blank  spaces  left  for  that 
purpose,  at  the  top  of  the  bill.  To  secure  brevity  in  entering  these  accounts,  use  certain  sym- 
bols and  abbreviated  expressions,  to  indicate  different  kinds  of  terms.  Following  is  a  list  of 
them  with  their  meanings  as  they  are  to  be  used  in  your  present  work : 

Net;    amount  of  bill  to  be  paid  without  further  discount. 

n  /30;  net  amount  of  bill  to  be  paid  within  30  days. 

2/30;  two  per  cent  off  if  paid  within  30  days. 

1/30 n/60;  one  per  cent  off  if  paid  for  in  30  days;  amount  of  bill  to  be  due  in  60 
days. 

Cash,  C.  O.  D,,  or  Net  Cash;  goods  to  be  paid  for  in  cash  as  soon  as  received, 
and  without  further  discount. 

[Continued  on  page  38.] 


OPERATING  BOOKS. 


37 


SALES  JOURNAL. 


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FORM  OF  BILL. 


THE  CENTRAL  CANNING  AND  DRYING  COMPANY. 


MANUFACTURERS  OF 


CHOICE  DRIED  AND  CANNED  GOODS, 


Jams,  Jellies,  Preserves,  Etc. 


Sold  to. 


Hartley  &  Adams 


Shipped  per. 


B.  &  O.  Ry. 


Fremont,  Ohio. 


Terms:  Canned  Goods  2/30  n/60  Dried  Fruits _L/^0_n/60      HUlsddle,  Ohio,^^Mili_l90-L 


125 

Cs.  Stan.  Peaches 

1 

15 

143 

75 

75 
40 

Bx.  Dried  Ap.  {3750  lb.) 

06 

225 

Cs.  Straw.  Jam 

1 

60 

64 

40 

"   Blk. 

1 

40 

56 

40 

"    Rasp.     " 

1 

50 

60 

548 

75 

Less  3  per  cent 

16 

46 

532 

29 

Received  Cash 

100 

Balance 

432 

29 

38 


CORPORATION  AND  VOUCHER  ACCOUNTING, 


CASH  BOOK.-LE.FT  FOLIO. 


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CasK  "i^ess  5;  five  per  cent  off  if  goods  are  paid  for  in  cash. 

Note — It  is  now  the  general  rule  in  business  that  cash  terms  are  allowed,  provided  payment  for  a  ship- 
ment of  goods  is  made  within  30  days  of  the  billing  date. 

Spot  Cash;  goods  paid  for  at  time  of  purchase,  usually  employed  where  goods  are  de- 
livered at  seller's  warehouse,  at  the  time  of  purchase. 

Abbreviations.  Convenience  and  economy  require  that,  in  billing,  certain  special 
abbreviations  be  used  to  indicate  the  articles  sold.  There  are  no  definite  rules  as  to  what 
these  abbreviations  shall  be;  each  bookkeeper  exercises  his  own  taste  and  judgment.  The 
symbol  chosen  should  be  definite,  however,  and  so  characteristic  of  the  word  abbreviated 
that  the  buyer  \^ill  have  no  difficulty  in  knowing  what  article  is  meant.  The  abbreviations 
given  in  your  Quotation  List  are  such  as  would  probably  be  used  by  a  billing  clerk,  and  you 
should  use  these  or  similar  ones  in  your  own  billing. 

What  to  do  When  a  Sale  is  Made. 

1.  Referring  to  the  quotation  list,  enter  the  purchase  with  the  date,  and  the  terms  and 
the  proper  prices,  on  the  bill,  being  careful  to  follow  the  directions  on  the  cover  of  your  Dupli- 
cate Bill  Pad.  On  a  sheet  of  loose  paper,  compute  the  amounts,  (and  discounts,  if  any  are 
allowed  at  the  time  the  bill  is  rendered),  after  which  enter  the  extensions  and  amounts  on 
the  bill.  Be  especially  careful  to  take  the  correct  prices,  as  given  on  the  Quotation  Lists, 
and  prove  all  computations  before  entering  the  amounts  on  the  bill.  In  columnar  bookkeep- 
ing, errors  in  billing  if  allowed  to  occur,  will  cause  much  annoyance,  and  extra  work. 

If  a  payment  is  made,  either  whole  or  in  part,  at  the  time  a  purchase  is  made,  credit  the 
payment  at  the  bottom  of  the  bill,  as  shown  in  the  model  form  on  page  37. 

2.  When  the  bill  is  prepared,  remove  it  by  tearing  along  the  perforated  line,  and  deliver 
to  the  customer  through  the  envelopes  marked  "Bills  Rendered."  Place  the  carbon  copying 
sheet  under  the  next  white  bill,  copying  surface  downward,  in  order  that  it  may  be  in  position 
when  another  bill  is  to  be  made  out. 

3.  Enter  the  sale  in  the  Sales  Journal  as  shown  in  the  model  form  on  page  37,  being 
careful,  if  the  sale  consists  of  both  dried  fruit  and  canned  goods,  to  enter  the  proper  amounts 
in  these  columns.  If  the  goods  are  sold  at  regular  list  terms,  it  will  be  sufficient  to  write  the 
word  "list"  in  the  terms  column. 

Should  a  sale  be  paid  for  at  the  time  the  order  is  given,  which  sometimes  occurs,  it  is 
nevertheless  entered  on  the  Sales  Journal  and  carried  to  the  customer's  account,  the  same 
as  a  time  sale.  In  a  manufacturing  or  wholesaling  business,  it  is  important  to  keep  records 
of  all  sales,  whether  for  cash  or  on  account. 


OPERATING  BOOKS. 


39 


CASH  BOOK.-RIGHT  FOLIO. 


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Care  should  be  taken  to  enter  in  the  Cash  Book  or  Journal  as  the  case  may  require,  and 
at  the  time  the  Sales  Journal  entry  is  made,  any  payments  that  may  have  been  made  to  apply 
on  the  purchase. 

The  Cash  Book. 

The  accompanying  form  illustrates  the  Cash  Book  to  be  kept  in  this  business.  Notice 
that  there  are  three  debit  and  three  credit  money  columns,  which  are  to  be  used  as  designated 
by  the  printed  headings.  The  totals  of  the  several  special  columns  are  posted  to  the  respec- 
tive accounts  in  the  Ledger  whenever  it  may  be  necessary.  When  a  page  of  the  Cash  Book 
is  filled,  the  several  totals  are  forwarded  to  the  next  page.  If  desirable,  the  Cash  columns 
may  be  balanced  at  any  time,  and  without  footing  up  and  posting  the  special  columns. 

When  the  totals  of  the  special  columns  are  posted,  the  Ledger  folio  is  entered  in  small 
figures  just  above  (or  below)  the  amounts,  as  shown  in  the  form. 

Petty  Expense  Book. 

In  conducting  a  business  office,  there  are  frequently  small  expenditures,  which  it  is  in- 
convenient to  keep  account  of  in  the  General  Cash  Book,  with  a  regular  entry  for  each  trifling 
expenditure.  Instead  of  doing  this,  the  minor  office  expenditures  are  provided  for  by  a 
special  fund  known  as  a  "Petty  Expense  Fund"  which  is  set  apart  for  the  purpose,  and 
which  is  in  the  personal  charge  of  the  bookkeeper  or  office  clerk  whose  business  it  is  to  make 
the  expenditures.  These  are  recorded  in  a  special  book  called  a  Petty  Expense  Book.  When 
cash  is  set  aside  for  petty  expenses,  the  amount  is  entered  on  the  debit  side  of  this  book,  and 
credit  entries  are  made  for  all  expenditures  as  they  occur.  An  account  with  "Petty  Expense" 
is  kept  in  the  General  Ledger,  and  at  the  time  cash  is  reserved  for  petty  expenses,  an  entry 
is  made  on  the  credit  side  of  the  Cash  Book,  charging  this  account  with  the  amount  reserved. 
When  the  books  are  closed,  any  unexpended  balance  belonging  to  the  Petty  Expense  Ac- 
count would  be  listed  as  a  resource. 

The  accompanying  form  illustrates  the  method  of  recording  the  entries  in  the  "Petty 
Expense  Book"  and  entering  and  forwarding  its  balances. 

PETTY  EXPENSE  BOOK. 


July 

5 
10 

12 

15 

Cash  Rec'd  per  Treas,  Ck.  No.  1 
Office  Stationery  as  per  Bill  of  Clarke  &  Sons 
Official  Fees  for  Incorporation 

Messenger  service  delivering  notices  to  incorporators 
Bal. 

Bal.  down 

25 

5 
12 

6 

25 
50' 

75 
50 

25 

25 

6 

50 

40 


CORPORATION  AND  VOUCHER  ACCOUNTING. 


The  Time  Book. 

In  establishments  where  there,  are  a  number  of  employees,  accounts  with  these  are  kept 
in  a  book  conveniently  ruled  for  the  purpose,  and  called  a  Time  Book.  In  most  business 
houses,  employees  are  paid  each  week,  and  the  Time  Book  here  shown  illustrates  the  time 
and  wages  as  made  out  for  the  first  week  for  a  working  day  of  eight  hours.  The  first  col- 
umn contains  the  numbers  of  the  several  employees,  the  next,  the  wages  per  day,  and  the 
succeeding  columns,  the  hours  worked  each  day  according  to  the  time-keeper's  book,  the 
total  number  of  hours  for  the  week,  and  the  amount  due.  In  some  Time  Books  there  is  a 
column  in  which  the  employee  writes  his  name  as  a  means  of  receipting  for  the  money  paid 
him,  but  this  practice  is  seldom  followed. 


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Memoranda  for  July  20  (C^«A«?^^^/r^w/'«^^j7.) 

Study  the  description  and  form  of  Journal  given  on  pages  36  and  33,  after  which,  pre- 
pare your  opening  entry  as  required  by  the  following  statement  of  the  resources  and  liabilities 
of  the  late  firm  of  Douglas,  Fenton  &  Co.  at  the  time  the  business  was  incorporated.  See 
the  opening  entry  for  McCloud  Tanning  Co.  page  23. 

The  six  personal  accounts  listed  among  the  resources  are  to  be  opened  in  the  Sales 
Ledger,  as  they  represent  customers  to  whom  goods  have  been  sold  on  account.  The  amount 
of  these  accounts  is  to  be  posted  direct  to  the  Sales  Ledger  Account  in  the  General  Ledger. 
The  method  of  listing  them  in  the  opening  entry  is  as  follows: — 


Sales  Ledger  Account 

2521 

55 

S.  H.  Arthur  &  Co., 

$425.30 

Stuart  &  Hall, 

247.50 

C.  H.  Bell  &  Son, 

321.15 

John  Maxwell, 

142.30 

Graham  Grocery  Co., 

456.80 

Farnham,  Blair  &  Co., 

928.50 

MEMORANDA  FOR  JULY  20.  41 


Statement  of  Resources  and  Liabilities  of  Douglas,    Fenton  O  Co.» 

July  20.    1901. 

Resources. 

Plant,  machinery,  tools,  etc $75000.00 

Canned  Goods,  Unsold  Stock. .  . '. 2590.75 

Tinning  and  Casings,  C.  G.  Dep't 248.15 

Miscellaneous,  C.  G.  Dep't 127.10 

Dried  Fruits,  Unsold  Stock 526.20 

Packing  and  Casing  Dr.  F.  Dep't 64.10 

Fuel  (estimated)   I75-00 

Bills  Receivable,  transferred 786.45 

Interest  accrued  on  same 65.50 

Accounts  Receivable  as  follozvs: 

S.  H.  Arthur  &  Co.,  Janesville,   Wis 425.30 

Stuart  &  Hall,  Aurora,  111 247.50  ♦ 

C.  H.  Bell  &  Sons,  Munice,  Ind 321.15 

John  Maxwell,  Clinton,  la 142.30  ■ 

Graham  Grocery  Co.,  Hannibal,   Mo 456.80 

Farnham,  Blair  &  Co.,  Hillsdale,   O 928.50 

Liabilities. 

Bills  Payable  (assumed  by  company) 2146.50 

Interest  accrued  on  same .  178.25 

Accounts  Payable  as  follozvs: 

Chicago  Tinning  Co 178.40 

Braile  &  McKnight,  Cincinnati,  O 329.70 

Ohio  Lumber  Co.,  Cleveland,  O 95- 10 

When  your  opening  entry  is  prepared,  submit  it  to  your  teacher  for  approval,  after 
v^bich,  it  should  be  posted  to  the  several  accounts  in  the  General  and  Sales  Ledgers.  For  con- 
venience, these  books  are  bound  together  under  one  cover.  The  General  Ledger  consists  of 
the  first  part  of  the  book,  which  is  ruled  for  half-page  accounts,  and  the  Sales  Ledger  the 
remainder  of  the  book,  the  Sales  Ledger  Index  separating  the  two. 

Page  each  Ledger  separately  before  opening  any  accounts,  beginning  with  the  first  page 
following  the  index. 

Open  accounts  in  your  Installment  Ledger  with  the  several  persons  who  have  sub- 
scribed for  stock,  debiting  them  for  the  number  and  amount  of  their  shares,  as  shown  by  the 
Stock  Subscription  Agreement.  (See  Installment  Ledger  page  14).  Then  make  out  Install- 
ment List  No.  I.  Rule  up  a  sheet  of  blank  paper  for  this  purpose,  following  the  form  of  In- 
stallment Book  given  on  page  13.  Keep  this  list  in  your  Installment  Ledger,  and  make  the 
required  entries  on  it,  and  on  the  Installment  Ledger  accounts,  whenever  any  of  the  install- 
ments are  paid. 

The  following  persons  have  paid  their  installments  (No.  i)  in  cash:  E.  P.  Moody, 
John  A.  Martin,  and  Student. 

Make  the  required  entries  on  the  Installment  List,  after  which,  make  out  and  deliver 
through  the  "Installment  Certificate"  envelope,  the  necessary  Installment  Certificates  and 
make  the  required  entries  in  the  Installment  Ledger.  Refer  to  your  Minute  Book  and  the 
memoranda  for  the  datings. 

Study  description  and  form  of  the  Special  Column  Cash  Book  given  on  pages  38  and 
39  after  which  credit  Subscription  with  the  installments  paid  by  Messrs.  Moody  and  Martin 
and  yourself,  as  in  the  entry  for  Jan.  7  in  the  Cash  Book  on  page  38. 

Read  description  of  the  Petty  Expense  Book  on  page  39. 


42  CORPORATION  AND  VOUCHER  ACCOUNTING. 

Since  you  have  been  Secretary  of  the  company  it  will  be  assumed  that  you  have  paid 
cash  for  incidentals  out  of  your  own  personal  funds,  as  follows  : 

July  lo — Ofifice  stationery  per  bill  of  Clarke  &  Sons $  5.25 

'  July  12 — Official  fees  incident  to  incorporation 12.50 

July  12 — Paid  messenger  boy  for  delivering  to  stockholders  special 

notices  of  called  meetings 75 

Total    .$18.50 

To  meet  these  and  similar  minor  expenditures,  the  Treasurer  of  the  company  hands  you 
a  check  for  $25. 

Make  the  necessary  entries  in  the  Cash  Book  and  Petty  Expense  Book.  See  entry  for 
Jan.  7  in  Cash  Book,  page  39. 

Read  carefully  all  instructions  relating  to  the  voucher  system  of  accounting  on  pages 
31  to  36,  after  which  continue  your  work  as  given  in  the  following  Memoranda. 

Memoranda  for  July  27,  1901. 

Note — To  secure  the  proper  maturity  of  notes  and  accounts,  and  to  avoid  too  much  repetition  of  similar 
transactions,  the  supposed  business  operations  for  one  week  will  be  given  under  one  dating,  viz :  the  last  day 
of  the  week.  This  arrangement  will  allow  the  corporation  business  to  extend  over  a  longer  period,  and  will' 
also  admit  of  a  more  reasonable  disposal  of  the  labor  accounts,  etc.  At  the  end  of  the  business  for  each  week,. 
the  student  will  post  all  entries  or  totals,  balance  the  Cash  Book,  and  take  a  trial  balance  of  the  General 
Ledger. 

A.  C.  Tilford  of  Hillsdale,  O.,  has  delivered  at  the  cannery  175  bu.  of  green  peas  at  30c. 
He  presents  buyer's  tickets  as  evidence  of  the  delivery.  Make  out  a  voucher  for  this  pur- 
chase as  follows : —  Fill  out  the  first  voucher  in  your  Voucher  Book,  following  the  form 
given  on  page  32.  Also  fill  out  the  stub,  entering  the  amount  opposite  Canned  Goods,  Raw 
Products.  Then  enter  the  voucher  in  the  Voucher  Payable  Register,  as  shown  in  the  entry 
for  Voucher  No.  i,  on  page  34.  Assuming  that  the  voucher  has  been  paid,  deliver  it  through 
the  envelope  marked  "Vouchers  Payable  Delivered,"  and  make  entry  on  credit  side  of  the 
Cash  Book  as  in  the  entry  for  Jan.  8,  page  39. 

Note — Be  careful  in  this  part  of  your  course  to  use  vouchers  in  the  "Voucher  Book"  and  not  those  ia 
"Voucher  Check  Book." 

Issue  a  voucher  in  favor  of  McNeil  &  Clarke,  Cincinnati,  for  their  bill  of  July  16,  for 
the  following  goods  that  have  been  duly  received  at  the  cannery.    Terms,  cash. 
15   Boxes   "XXX"   Tin  Plates  at  $18.50 

12  Boxes  "Mediuin"  Tin  Plates  at  15-25 

Enter  on  stub  and  in  the  Casing  Column  of  the  Canned  Goods  Account  in  Voucher 
Payable  Register.  See  entry  for  Voucher  No.  2,  page  34.  Make  Cash  Book  entry  as  in 
previous  voucher. 

Paid  cash  for  postage  stamps  for  office,  $2.    Enter  in  "Petty  Expense  Book." 

Geo.  P.  Morton  hands  you  his  check  for  payment  of  Installment  No.  i.  Issue  Install- 
ment Certificate  and  make  entry  in  Installment  Ledger,  Installment  List,  and  Cash  Book  as- 
heretofore. 

The  Acme  Printing  Co.  of  Cleveland,  O.,  has  delivered  5000  advertising  circulars  with: 
their  bill  for  same,  dated  July  20,  $21.75.  Issue  and  deliver  voucher,  charge  "Gen.  Expense" 
in  Voucher  Payable  Register;  and  make  proper  Cash  Book  entries  as  heretofore. 

C.  W.  Wilson,  Castleton,  O.,  presents  buyer's  tickets  for  185  crates  blackberries  at  40c, 
delivered  at  cannery.  Issue  and  dispose  of  voucher  and  make  entries  as  in  the  case  of  the 
peas  bought  of  A.  C.  Tilford. 

S.  H.  Arthur  &  Co.  remit  N.  Y.  draft  for  $234.08  in  payment  of  a  bill  of  goods  sold 
them  on  July  6  by  Douglas,  Fenton  &  Co.,  amounting  to  $246.40,  on  which  they  are  entitled 
to  a  discount  of  5  per  cent.  Make  necessary  Cash  Book  entries  in  "Sales  Ledger  Credits," 
"Mdse.  Dis.  Debits"  and  "Cash  Debits"  columns.  See  entry  in  Cash  Book,  page  38  for 
Jan.  8. 

J.  S.  Aliller  pays  Cash  for  Installment  No.  i.     Proceed  as  heretofore. 

T.  J.  Hart  &  Sons,  Piqua,  O.,  remit  check  for  their  note  of  Jan.  5  for  $172.40  with  ac- 
crued interest  to  date,  $5.68.  Credit  "Bills  Rec."  and  "Interest"  in  Cash  Book  as  in  entries 
for  Jan.  9,  page  38. 

J.  M.  Johnson,  Hillsdale,  O.,  presents  Buyer's  Tickets  for  68  bu.  peas  at  35c.  Make 
out  Voucher  and  dispose  of  transaction  as  in  previous  cases. 


MEMORANDA  FOR  JULY  27.  43 


Read  carefully  all  instructions  under  "Recording  Sales  of  Merchandise,"  pages  36  to  39, 
after  which  dispose  of  the  following  sales,  observing  carefully  all  instructions  as  to  preparing 
and  copying  bills,  making  entries  in  Sales  Journal,  etc.     (See  "Abbreviations,"  page    38.) 

A.  Monroe  &  Co.,  Elkhart,  Ind. — 

50  cases  Perf.  Blk. ;  40  cases  Pie  Blk. ;  25  cases  Perf.  Peas;  10  cases  Straw.  Jam.    List 
terms.    See  Sales  Journal  entry  for  Jan.  8,  page  37. 

Stuart  &  Hall,  Aurora,  111. — 

25  Bx.  Dia.  Ap. ;  15  Bx.  Dia.  Pears;  20  Cs.   Perf.  Cher.;   15   Cs.  Cr.  Ap,  Jam.     List 
terms.    See  entry  for  Jan.  4,  page  37. 

Note — Hereafter  in  all  sales  of  dried  fruit,  assume  boxes  to  weigh  50  lbs.  each. 

O.  C.  Oliver  &  Co.,  Monmouth,  O. — 

75  Cs.  Pie  Blk.;  30  Cs.  Rasp.  Jam;  30  Cs.  Straw.  Jam;  40  Cs.  Straw.  Jel.    List  terms. 

Farnham,  Blair,&  Co.,  Hillsdale,  O. — 

100  Cs.  Perf.  Blk.;  25  Cs.  each  Straw.,  Rasp.,  and  Cr.  Ap.  Jelly;  75   Bx.   Dia.    Ap. 
Spot  Cash  less  6  per  cent. 

This  is  a  sale  to  a  local  buyer  who  pays  cash  and  receives  a  special  discount  of  6  per  cent 
from  our  regular  list  prices.  Such  sales  are  rather  unusual  in  wholesaling  business;  but 
since  it  is  desirable  to  keep  an  account  of  all  sales,  they  are  entered  in  the  Sales  Journal,  the 
same  as  a  sale  on  account.  Entries  are  made  in  the  Cash  Book  as  in  the  case  of  a  payment  on 
account.  The  buyer  is  charged  for  the  goods;  the  same  as  if  he  had  bought  them  on  ac- 
count and  had  then  been  credited  for  the  cash  payment  with  the  discount  added.  See  Sales 
Journal  entry  for  Jan.  10,  page  37,  also  Cash  Book  entry  for  Jan,  8,  page  38. 

Note — A  question  might  be  raised  as  to  the  necessity  for  making  these  several  entries  in  the  case  of  a 
cash  sale,  but  it  should  be  remembered  that  in  a  large  wholesaling  business,  it  is  of  much  importance  to  keep 
complete  records  of  every  sale;  the  method  here  indicated  is  the  one  followed  by  most  firms. 

C.  W.  Walker,  of  Arcade,  O.,  presents  buyer's  tickets  for  69  tons  of  sweet  corn  at 
$4.50.     Make  out,  pay,  and  deliver  voucher,  as  heretofore. 

J.  S.  Miller  has  transferred  his  installment  certificate'  to  A.  W.  Nelson,  of  Monmouth, 
O.,  who  is  to  assume  Mr.  Miller's  Stock  Subscription.  See  directions  for  transferring  in- 
stallment certificates  pages  7  and  14,  and  proceed  as  there  directed. 

The  Graham  Grocery  Co.,  Hannibal,  Mo.,  have  accepted,  under  date  of  July  25,  and  re- 
turned our  draft  drawn  on  them  at  30  days'  sight  for  balance'  due  us.  See  entry  for  Jan.  6 
on  page  33. 

A.  P.  Harbinger  &  Sons,  Cleveland,  O.,  have  rendered  us  a  bill  dated  July  20  for  spices 
bought  for  Canning  Dept.  amounting  to  $85.70,  upon  which  we  are  entitled  to  a  discount  of 
3  per  cent.  Make  out  and  deliver  voucher  for  the  amount  less  discount.  Iterhize  on  face  of 
voucher  as  follows : 

For  Bill  of  July  20 $85.70 

Less  3  per  cent 2.57    83.13 


Charge  to  "C.  G.  Miscellaneous  Account,"  on  stub  of  voucher  and  in  V.  P.  R.  See 
Cash  Book  entry  for  Jan.  10,  page  39. 

A.  T.  Melville  .&  Co.,  Indianapolis,  order  on  our  regular  list  terms  as  follows : — 

50  Cs.  "Perf."  Peaches,  75  Cs.  Standard  Corn,  40  Bx.  Orchard  Apples,  2000  lbs. 

The  Brandon  Co.,  Trenton,  N.  J.,  have  delivered  to  us :  3  Davis  Fruit  Evaporators 
with  equipment  complete  as  per  bill  of  July  22,  $4265.90.  We  buy  these  machines  at  30 
days.  Make  out  voucher  and  required  entries  in  Voucher  Payable  Register,  charging  pur- 
chase to  "Plant."  As  the  voucher  is  not  to  be  paid  at  once,  allow  it  to  remain  in  the  Vouch- 
er Book  until  the  expiration  of  the  term  of  credit.    See  entry  for  Voucher  No.  6,  page  34. 

The  Company  Directors  have  authorized  Arthur  Moore  to  pay  his  installment  with 
cash  $2500  and  his  30  day  note  at  6  per  cent  interest  with  approved  security  for  balance.  Is- 
sue the  necessary  Installment  Certificate.     See  Journal  entry  for  July  7,  page  33.     Enter 


44  CORPORATION  AND  VOUCHER  ACCOUNTING. 

the  Cash  item  in  the  general  column  of  the  Cash  Book,  checking  off  the  item  in  the  Journal. 
No  explanation  in  the  Cash  Book  is  necessary,  write  "J-"  ^^  the  explanation  column  to  show- 
that  the  item  was  entered  from  the  Journal. 

The  Company's  buyer,  E.  P.  Moody,  has  purchased  from  various  parties  since  the  Com- 
pany was  incorporated,  products  for  the  Canned  Goods  Dept.  amounting  to  $1428.50,  and 
for  the  Dried  Fruit  Dept.  $967.25.  He  presents  foremen's  receipts  for  the  amounts  of  the 
several  purchases  and  you  are  to  issue  a  voucher,  with  check,  to  him  for  the  full  amount. 
Itemize  in  voucher  as  follows : 

For  Purchases  to  date  of  Raw  Prod,  for  Can.  Dept 1428.50 

For  Purchases  to  date  of  Raw  Prod,  for  Dr.  Fruit  Dept 967.25 


239575 


Note — In  the  canning  business,  fruits,  vegetables  and  other  required  raw  products,  are  usually  bought  by- 
contract  from  the  growers,  who  deliver  them  from  time  to  time  at  the  Cannery,  receiving  weigher's  checks, 
which  are  presented  at  the  office  and  paid.  If  the  voucher  system  is  not  used,  the^  proper  accounts  are 
charged  in  the  Cash  Book.  In  the  present  course,  to  avoid  the  issue  of  the  large  number  of  vouchers  which 
would  be  necessary  in  accounting  for  these  separate  purchases  of  raw  products,  it  will  be  assumed  that  most 
of  them  are  made  by  the  buyer,  E.  P.  Moody,  who  personally  pays  for  them,  receiving  at  the  end  of  each 
week  a  voucher  with  payment  for  the  entire  amount  purchased  for  that  week  as  shown  by  the  foremen's  re- 
ceipts. 

Henry  T.  Bell  pays  cash  for  first  installment  of  his  stock. 
The  B.  &  O.  Ry.  Co.  freight  bills  to  date  are  as  follows : 

27  Bx.  Tin,  McN.  &  Co.,  Cin $  3.75 

3  Bx.  Spices,  A.  P.  H.  &  Co.,  Cleveland    6.75 

Carload  Machinery,  The  Brandon-  Co.,  Trenton,  N.   T 67.50 

Issue  voucher  with  payment,  charging  the  items  respectively  to  "C.  G.  Casing,"  "C.  G. 
Miscel,"  and  "Plant"  accounts. 

See  entries  for  Voucher  No.  9,  page  34. 

Note — Always  make  out  the  voucher,  with  the  proper  entries  on  the  stub,  before  making  the  record  in 
the  V.  P.  R. 

L.  M.  Barnes  hands  in  Pay  Roll  for  the  week  as  follows : — 

Canned  Goods  Dept,  $1826.15;  Dried  Fruit  Dept,  $623.95. 

Issue  voucher  with  payment  in  favor  of  Mr.  Barnes,  charging  the  amounts  to  the  re- 
spective labor  accounts.     See  entry  for  voucher  No.  12,  page  34. 

Note — In  manufacturing  concerns,  the  accounts  with  operatives,  are  kept  by  the  time-keeper  who  usually 
makes  his  report,  weekly,  to  the  Superintendent  in  time  for  the  hands  to  be  paid  off  on  Saturday  evening. 
The  pay  roll,  after  being  approved  by  the  Superintendent,  is  passed  to  the  proper  office  clerks  who  place  in 
separate  envelopes  the  exact  amounts  of  money  due  the  several  employees.  Sometimes  the  employees  are 
required  to  sign  the  pay  roll  as  a  receipt,  but  this  is  not  usual,  especially  in  large  establishments.  Some  con- 
cerns pay  their  employees  on  Monday  for  the  work  done  the  previous  week. 

The  form  on  page  40  illustrates  a  convenient  method  for  keeping  a  time  book,  from 
which  the  pay  roll  is  made  out. 

Salaries  have  been  paid  for  the  week  as  follows :  L,  M.  Barnes,  $50 ;  Student,  $40 ; 
J.  M.  Davis,  $30;  E.  P.  Moody,  $40;  James  Douglas,  $40.  Charge  Gen.  Expense  in  Cash 
Book,  as  in  the  entry  for  Jan.  9,  on  the  Credit  side  of  the  Cash  Book,  Page  39. 

Note — Where  there  are  several  persons  who  receive  their  salaries  regularly  each  week  or  month,  it  is 
unnecessary  to  keep  individual  accounts  with  these  persons,  since  the  checks  when  endorsed,  constitute  a 
sufficient  record.  If,  however,  salary  pa3'^ments  are  made  irregularly,  it  is  better  to  keep  the  individual  ac- 
counts. 

A  meeting  of  the  Board  of  Directors  was  held  on  this  date.     Present  a  full  board. 

Motion  by  Director  Douglas  that  a  further  installment  of  50  per  cent,  of  the  subscribed 
stock  be  called  for,  the  same  to  be  due  and  payable  on  or  before  Aug.  3,  1901.  Carried  by 
unanimous  vote. 

Motion  by  Director  Moore  that  J.  A.  Ryan  be  employed  to  act  as  night  watchman,  at 
the  factory  at  a  salary  of  $15  per  week.    Carried. 


MEMORANDA  FOR  JULY  27.  45 


The  chairman  addressed  the  board  on  the  importance  of  equipping  the  Cannery  with  im- 
proved machinery.  Decided  on  motion  of  Director  Morton  that  Supt.  Barnes  be  instructed, 
to  make  an  immediate  trip  to  Cleveland  and  Chicago  for  the  purpose  of  investigating  late 
canning  machinery,  prices,  etc.,  and  the  feasibility  of  disposing  of  certain  machinery  that  it 
is  expected  to  replace.  It  was  also  decided  that  the  foreman  of  the  Cannery,  C.  W.  Peters, 
is  to  act  as  superintendent  during  the  absence  of  Mr.  Barnes.  The  meeting  then  adjourned 
until  August  3rd,  at  which  time  Mr.  Barnes  is  expected  to  make  his  report. 

Record  the  proceedings  of  this  meeting  in  the  Minute  Book,  and  make  out  Installment 
List  No.  2. 

You  will  now  post  the  books  to  date,  observing  with  great  care  the  following  direc- 
tions : — 

1.  Find  the  correct  footings  of  the  following  special  columns,  recording  them  and 
making  the  proper  rulings,  as  shown  in  the  model  forms  as  follows : — 

(a)  "Sales  Ledger  Credits"  Column  in  Journal,  page  33. 

(b)  "Sales  Ledger  Credits,"  "Mdse.  Dis.,"  (Debits  and  Credits,)  and  "Voucher  Pay. 
Debits"  Columns  in  Cash  Book,  pages  38  and  39. 

(c)  The  three  columns  of  the  Sales  Journal,  page  37. 

Note — See  that  the  totals  of  the  "Canned  Goods"  and  "Dried  Fruit"  columns  together  equal  the  total  of 
the  "Sales  Ledger  Debits"  column. 

(d)  All  the  money  columns  of  the  V.  P.  R.,  pages  34  and  35. 

Note — Prove  the  V.  P.  R.,  by  ascertaining  that  the  total  of  the  "V.  Pay.  Cr."  column  equals  the  sum  of 
the  totals  of  the  other  columns. 

2.  Post  the  Journal,  Be  sure  that  all  accounts  with  customers  are  opened  in  the  Sales 
Ledger,  and  that  every  account  is  properly  indexed  when  it  is  opened.  Post  the  total  of  the 
"Sales  Ledger  Credits"  column  to  the  credit  side  of  the  Sales  Ledger  Account  in  the  General 
Ledger. 

3.  Post  the  Cash  Book,  omitting  such  items  as  were  entered  from  the  Journal,  also,  the 
credit  items  that  record  the  payment  of  vouchers.  Post  the  totals  of  the  special  columns  of 
the  Cash  Book  as  follows : 

(a)  The  "Sales  Ledger  Credits"  column  to  the  credit  side  of  the  Sales  Ledger  Ac- 
count. 

(b)  The  "Mdse.  Dis."  columns  to  the  debit  or  credit  side  of  the  Mdse.  Discount  Ac- 
count, as  indicated  by  the  headings. 

(c)  The  "Voucher  Pay.  Debits"  column  to  the  debit  side  of  the  Vouchers  Payable  Ac- 
count. 

Note — In  posting  th.ese  special  columns,  you  will  need  to  observe  great  care  that  you  do  not  enter  them 
on  the  wrong  side  of  the  Ledger. 

4.  Post  the  Sales  Journal.  The  amount  of  each  sale  is  to  be  entered  on  the  debit  side 
of  the  customer's  account  in  the  Sales  Ledger,  and  in  making  this  entry  always  enter  the 
terms  of  the  sale  in  the  explanation  column  of  the  Ledger,  This  will  save  the  trouble  of  look- 
ing back  through  the  Sales  Journal  when  customers  send  remittances  in  payment  of  their  pur- 
chases. 

Post  the  total  of  the  "Sales  Ledger  Debits"  column  to  the  debit  side  of  the  Sales 
Ledger  Account,  and  the  "Canned  Goods"  and  "Dried  Fruit"  credit  columns  to  the  credit: 
side  of  the  respective  accounts  in  the  General  Ledger. 

5.  Post  the  Voucher  Payable  Register,,  as  follows :  Post  the  total  of  the  "V.  Pay.  Cr." 
column  to  the  credit  side  of  the  Vouchers  Payable  Account,  and  the  totals  of  all  the  other 
columns  to  the  debit  side  of  the  several  acccounts  in  the  General  Ledger, 

6.  The  correctness  of  the  General  Ledger  is  now  to  be  proved  by  means  of  a  Trial  Bal- 
ance, with  the  method  of  preparing  which,  the  student  is  assumed  to  be  familiar. 

Following  is  a  list  of  the  accounts  that  should  appear  on  your  Trial  Balance  for  July 
24,  The  several  accounts  of  the  Sales  Ledger,  of  course,  do  not  appear,  as  these  are  repre- 
sented by  the  Sales  Ledger  Account  in  the  General  Ledger, 

The  balance  of  Cash  should  be  entered  on  the  debit  side  of  the  Trial  Balance,  but  as 
errors  in  the  Cash  Book  are  likely  to  be  found,  it  is  well  not  to  close  and  balance  the  Cash 
Book  until  after  the  correctness  of  the  books  has  been  ascertained. 


-46  CORPORATION  AND  VOUCHER  ACCOUNTING. 


Cash. 

Capital  Stock. 
Subscription. 
Franchise. 
Plant. 
Canned  Goods. 

"     Casing. 


Dried  Fruit. 


Miscellaneous. 

Labor. 

Raw  Product. 

"     Raw  Product. 
"     Casing. 
"        •     "     Labor. 
Fuel. 

General  Expense. 
Petty 

Mdse.  Disc. 
Bills  Receivable. 
Payable. 
Interest. 
Sales  Ledger. 
Vouchers  Payable. 
Chi.  Tinning.  Co. 
Braile  &  McKnight. 
Ohio  Lumber  Co. 

7.  When  your  Trial  Balance  has  been  submitted  to  your  teacher  and  approved,  balance 
:  and  close  the  Cash  Book,  after  which  continue  with  the  work  as  follows : 

Memoranda  for  Aug.  3. 

A  warehouse  for  storage  of  goods,  etc.,  has  been  leased  from  B.  T.  Sloan,  at  a  rental 
of  $75  per  month  beginning  Aug.  i,  and  one  month's  rent  has  been  paid  in  advance.  Charge 
to  Gen.  Expense  in  Cash  Book. 

F.  H.  Lanning  of  Avon,  O.,  has  delivered  at  the  Cannery,  berries  from  his  fruit  farm  as 
per  buyer's  receipts,  filed  this  day,  $614.20. 

A.  B.  Halloway  of  Columbus,  O.,  sends  a  "rush"  order  for  100  Cases  "Perf."  Blk.  at 
list  terms.  He  requests  us  to  send  by  U.  S.  Express  and  prepay  charges.  Include  the  ex- 
press charge,  $28.60,  in  the  bill  and  charg'e  the  item  to  "Canned  Goods"  in  the  Cash  Book. 

We  have  sold  R.  C.  Noble  &  Co.,  Sharon,  Ind.,  at  30  days,  25  Cs.  each  of  our  Straw., 
Rasp.,  and  Cr.  Ap.  Jel.,  and  50  Bx.  Dia.  Peach.  This  is  a  trial  order  and  the  buyers  are  to 
be  allowed  special  discounts  from  list  prices  of  6  per  cent  on  the  Strawberry  and  Raspberry, 
5  per  cent  on  the  Crab  Apple  Jelly,  and  2^  per  cent  on  the  Peaches. 

Indicate  the  rate  of  discount  allowed  on  each  item,  when  making  out  the  bill,  and  deduct 
before  entering  the  amount. 

Note — As  these  are  not  time  discounts,  but  special  rebates  from  prices,  and  given  to  secure  trade,  they  are 
not  carried  to  the  Merchandise  Discount  Account. 

A.  B,  Newell  &  Sons,  Hillsdale,  O.,  present  their  bill  of  July  22,  for  services  in  placing 
machinery  and  making  various  repairs  in  the  plant,  $72.10.  Issue  Voucher  with  payment  and 
charge  to  Gen.  Expense. 

Withdraw  $20  in  cash,  and  charge  to  Petty  Expense  Fund. 

M.  F.  Lee,  Hillsdale,  O.,  presents  buyer's  checks  for  23  tons  Green  Peas  at  $16.50  and 
173^  tons  Green  Beans  at  $12.50. 

Farnham,  Blair  &  Co.   hand  us  $500  on  account. 

We  have  received  from  Chicago  Sugar  Refining  Co.,  billed  at  2-30,  n-60,  a  car  load  of 
"Extra  C"  sugar,  100  Bbl.  (300  lb.  ea.)  at  5^c. 


MEMORANDA  FOR  AUG.  3.  47 


Voucher  made  out  but  not  paid.    Charge  to  "Canned  Goods,  Miscel." 

The  Ohio  Lumber  Co.,  Cleveland,  O.,  present  bill  of  Aug.  i,  for  lumber  purchased  for 
casings  (boxes  for  packing  goods)  $379.15.  This  lumber  is  billed  at  30  days.  $165.40  of 
the  amount  is  for  the  Canned  Goods  Dept.,  and  the  remainder  for  the  Dr.  Fruit  Dept. 

C.  A.  Gregory  &  Co.,  iVkron,  O.,  order  at  regular  list  terms  the  following  goods:  60 
Cs.  Perf.  Pears;  75  Cs.  Stan.  Cher.;  25  Cs.  Perf.  Ap. ;  75  Cs.  B.  Bk.  Beans,  and  18  Cs. 
Stan.  Ap.  B. 

Pd.  Hillsdale  Loan  &  Trust  Co.  rent  to  Sept.  i,  $375.     (Gen.  Expense — no  voucher.) 

The  Student,  Geo.  P.  Morton,  A.  W.  Nelson,  and  E.  P.  Moody,  pay  cash  due  for  Install- 
ment No.  2. 

C.  H.  Bell  &  Co.,  Munice,  Ind.,  order  at  list  prices,  a  car  load  of  Dia.  Peach.,  800  boxes. 
They  send  their  check  for  $1500,  and  are  to  be  allowed  60  days  in  which  to  settle  for  the  bal- 
ance of  the  invoice.  Charge  them  in  Sales  Journal  for  full  amount  of  the  bill,  giving  them 
credit  in  the  Cash  Book  for  payment. 

The  Hocking  Valley  Coal  Co.,  Hillsdale,  O.,  present  their  bill  of  July  29  for  a  car  load 
of  coal,  45000  lbs.  at  $1.70  per  ton.  Make  out,  pay,  and  enter  voucher,  charging  to  Fuel 
Account. 

O.  C.  Oliver'  &  Co.  remit  check  for  their  purchase  of  July  2.^,  less  2  per  cent. 

A.  Monroe  &  Co.,  Kokomo,  Ind.,  order  12  Cs.  each  of  Blk.,  Straw,  and  Cr.  Ap.  Jam; 
25  Cs.  Perf.  Peas,  and  40  Bx.  Dia.  Ap.  We  have  offered  them  2^  per  cent,  off  for  "spot 
cash."  and  their  order  is  accompanied  by  a  check  for  a  sum  sufficient  to  entitle  them  to  a 
credit  of  $100. 

A.  T.  Melville  &  Co.  ask  for  a  Memorandum  of  Credit  for  a  shortage  of  3  Bxs.  Orch. 
Ap.  in  our  recent  shipment  to  them,  reporting  also  that  six  of  the  cases  of  peaches  sent  were 
■''Standard"  instead  of  "Perfection",  as  ordered;  these,  however,  they  will  retain  if  credited 
with  the  difference  in  cost.  Journal  entry ;  debit  "Canned  Goods"  and  "Dried  Fruits"  for  the 
discrepancies  and  credit  Sales  Ledger  Account,  making  full  explanation.  See  Journal  entry 
for  Jan.  8,  page  33. 

The  Eagle  Boiler  Co.,  Cleveland,  O.,  present  their  bill  for  boiler  and  trimmings,  for 
use  in  drier,  $485.60,  also  for  setting  up  same  and  making  connections,  etc.,  $47.25.  Is- 
sue and  pay  voucher  and  charge  to  "Plant." 

Note — Hereafter,  no  special  directions  will  be  given  as  to  entries,  unless  in  the  case  of  exceptional  or 
■difficult  transactions. 

H.  T.  Bell,  Arthur  Moore,  and  J.  A.  Martin,  have  paid  cash  for  the- amounts  due  from 
them  on  Installment  No.  2. 

Our  traveling  salesman,  John  A.  Martin,  sends  in  his  expense  bill  for  the  week  ending 

July  27,  amounting  to  $47.50.     He  requests  that  we  remit  to  him    a    check    covering    the 

amount  of  this  bill,  also  $25  on  account  of  salary.     His  request  is  complied  with. 

Note — Commercial  travelers  usually  send  in  vi^eekly  bills  for  their  expenses,  which  amounts  are  remitted 
to  them  direct,  but  on  account  of  their  absence  from  the  place  of  business,  their  salaries  are  not  usually  paid 
regularly  each  week.  For  this  reason  it  is  convenient  to  keep  personal  accounts  with  them,  crediting  them 
periodically  with  salary  due  and  charging  them  with  all  payments  on  account  of  salary.  Their  expense  bills 
are  paid  and  charged  to  "General  Expense,"  vouchers  being  made  out  as  in  the  case  of  other  bills.  In  the 
present  case,  charge  Mr.  Martin  in  the  Cash  Book  with  the  $25  sent  him  on  account  of  salary,  and  remit 
voucher  with  payment  for  the  expense  bill.     In  business,  a  separate  check  would  be  sent  for  each  amount. 

Arthur  Moore,  having  in  contemplation  the  sale  of  a  portion  of  his  corporation  interests, 
surrenders  his  two  installment  certificates,  Nos.  7  and  14,  and  requests  you  to  issue  in  their 
stead  two  other  certificates,  one  for  100  and  the  other  for  150  shares.  Take  Mr.  Moore's 
certificates  from  the  "Installment  Certificate"  envelope,  cancel  them,  and  attach  to  the  orig- 
inal stubs,  and  issue  him  two  new  certificates  for  the  amounts  desired,  each  one  covering  in- 
stallments I  and  2,  or  75  per  cent  of  the  face.  Credit  him  in  the  Installment  Ledger  for  the 
amount  still  unpaid  on  the  two  certificates  cancelled,  and  charge  him  with  the  new  ones  is- 
sued. 

Read  "Transferring  Stock,"  page  7,  and  see  R.  C.  Venable's  Account  in  Installment 
Ledger,  page  14. 

Charles  Baker,  traveling  salesman,  reports  traveling  expenses  for  the  week  ending  July 
2^,  $61.20,  and  A.  W.  Long  reports  expenses  amounting  to  $41.15.  Issue  and  pay  the  neces- 
sary vouchers  and  make  entries  as  heretofore. 

Stuart  &  Hall  remit  their  check  in  payment  of  their  purchase  of  July  27,  less  the  speci- 
fied discount  allowed  on  the  two  classes  of  goods  covered  by  their  bill. 


48  CORPORATION  AND  VOUCHER  ACCOUNTING. 

The  clerk  of  the  Board  of  Public  Works,  Mr.  S.  A.  Balcom,  presents  a  bill  for  our  water 
rates  for  July  amounting  to  $71.25.     Voucher  with  payment,  charge  to  "Gen.  Expense." 

Sold  A.  T.  Melville  &  Co.  at  list  terms,  75  Cs.  ea.  Straw.,  Rasp.,  Blk.,  and  Cr.  Ap.  Jam, 
and  100  Bx.  Orchard  Peaches. 

Arthur  Moore  wishes  to  transfer  to  H.  T.  Bell  Installment  Certificate  No.  16  for  100 
shares.  Take  the  certificate  from  the  Installment  Certificate  envelope,  fill  out  the  form  on  the 
back,  and  present  it  to  your  teacher  who  will  sign  for  Mr.  Moore.  Cancel  the  certificate  and 
attach  to  the  original  stub,  then  issue  a  certificate  to  the  transferee  for  the  required  number 
of  shares.     Make  entries  in  the  Installment  Ledger  as  instructed  on  page  7. 

E.  P.  Moody  presents  foremen's  receipts  for  $2462.25  for  raw  products  purchased, 
$1756.40  of  which  is  for  the  Cannery  and  the  remainder  for  the  Drier. 

The  B.  &  O.  Ry.  presents  bills  for  freight  as  follows : — 

July  29,  100  bbls.  Sugar,  C.  S.  Ref.   Co.,  31250  lbs.  at  125^  per  cwt. 

July  31,  I  Car  Lumber,  O.  L.  Co.,  Cleveland $21.50 

Aug.  I,  I  steam  boiler,  etc..  Eagle  Boiler  Co.,  Cleveland 34-20 

Make  out  and  pay  voucher.  Charge  the  items  of  the  bill  to  the  proper  accounts  as  indi- 
cated by  the  several  shipments.  Pro  rate  the  item  of  freight  on  lumber  between  the  drying 
and  canning  departments,  on  the  basis  of  charges  against  these  departments  when  the  lumber 
bill  was  paid. 

Note — In  pro  rating  charges  of  this  kind,  exact  mathematical  accuracy  is  not  required.  Drop  the  cents 
and  find  the  percentages  as  follows  :— 

$165-^$379=43.5+or  44  per  cent'. 

$21.50X44  per  cent  =  $9. 46.      Freight  charge  to  Canned  Goods  Casing  Dept. 

$21.50 — $9. 46=  $12.04.      Freight  charge  to  Dr.  Ft.  Casing  Dept. 

The  pay  roll  for  the  week  amounts  to  $1915.10  for  the  Canning  Dept.  and  $681.50  for 
the  Drier.  Issue  a  voucher  to  the  acting  superintendent,  C.  W.  Peters,  charging  the 
amounts  to  the  respective  labor  accounts. 

Pay  cash  for  salaries  for  company  officers,  same  amounts  as  for  week  ending  July  27. 

Post  the  books  to  date  following  previous  instructions.  Close  Cash  Book  and  prepare 
a  Trial  Balance  for  the  Ledger,  which  you  will  submit  to  your  teacher  for  approval. 

Proceedings  of  a  Called  Meeting  of  the  Board  of  Directors  to  Hear  Report  of 
SuPT.  Barnes  Regarding  the  Purchase  of    New    Machinery^    Etc. 

Mr.  Barnes  made  an  extended  verbal  report,  describing  the  various  cannery  plants  he 
had  visited  and  making  recommendations  as  to  the  changes  in  the  present  plant  and  machin- 
ery which  seemed  to  him  desirable.  The  plans  proposed  would  involve  an  expenditure  of 
from  $60,000  to  $75,000,  and  enable  the  capacity  of  the  cannery  to  be  doubled. 

Lengthy  discussion  of  Mr.  Barnes'  report. 

Committee  consisting  of  directors  Martin,  Douglas,  and  Moore,  was  appointed  to  co- 
operate with  Mr.  Barnes,  and  take  immediate  steps  to  enlarge  the  plant  and  provide  it  with 
improved  machinery  in  accordance  with  his  suggestions. 

A  call  was  made  for  payment  of  the  third  and  final  Installment  of  Subscribed  Stock,  the 
same  to  be  due  on  or  before  Aug.  17. 

The  Secretary  was  instructed  to  investigate  the  present  condition  of  the  Company's  in- 
surance policies,  and  to  arrange  for  increasing  the  same. 

The  Secretary  was  also. requested  to  prepare  and  submit  at  the  next  meeting  of  the 
Board,  a  code  of  By-laws  for  the  government  of  the  Corporation. 

Meeting  adjourned  to  Aug.  17,  1901,  at  7:30  p.  m. 

Note — ^The  student  should  write  up  these  minutes  in  the  Minute  Book,  exercising  all  the  care  that  he  would 
use  were  he  holding  the  responsible  position  of  Secretary  in  a  real  corporation.  It  is  only  by  actual  and 
faithful  practice  that  one  can  learn  to  do  work  of  this  kind.  He  should  also  try  his  hand  at  preparing  a  set 
of  By-laws,  such  as  he  would  consider  desirable  in  the  case  of  a  corporation  of  the  nature  of  the  Central 
Canning  and  Drying  Co.  These  By-laws  might  cover  such  matters-  as,  i.  The  time  of  holding  the  annual 
meeting  of  Stockholders.  2.  The  time  of  Directors'  regular  meetings.  3.  The  general  duties  of  the  officers, 
4.     Regulations  governing  the  expenditure  of  the  Company's  funds,  the  auditing  of  the  accounts,  etc. 


Memoranda  for  Aug.  10. 

D.  S.  Milton  &  Sons  renew  their  note  of  May  12,  fav.  D.  F.  &  Co.,  for  $487.50  with  ac- 
crued interest  at  8  per  cent  to  date,  giving  us  a  new  note  at  60  days  for  whole  amount  due. 

Note — Find  the  time  by  counting  the  days  from  one  date  to  the  other. 

The  foreman  of  the  Cannery  hands  in  a. charge  ticket,  showing  that  75  bu.  of  Peaches 

costing  85c  per  bu.  and  which  were  purchased  for  the  Cannery,  have  been  transferred  to  the 

Drier. 

Note — In  a  manufacturing  business  transfers  are  often  made  from  one  department  to  another,  and  of 
course,  must  be  entered  on  the  books  when  accounts  are  kept  with  the  separate  departments.  The  usual 
method  is  for  the  foreman  of  the  department  making  the  transfer,  or  his  clerk,  to  make  out  a  "Charge  Ticket" 
or  transfer  bill  in  which  the  goods  are  described  and  their  value  stated.  To  prevent  mistake,  the  charge 
ticket  should  be  "OK-ed"  or  otherwise  countersigned  by  the  receiving  foreman  or  clerk  before  being  handed 
to  the  bookkeeper.  The  department  to  which  the  goods  are  transferred  is  debited,  and  the  department  mak- 
ing the  transfer  is  credited.     See  entry  for  June  9,  page  33. 

Marvin  &  Wright,  Cincinnati,  O.,  have  ordered  for  immediate  shipment  at  list  terms : 
100  Cs.  Stand.  Tomat. ;  75  Cs.  Pie  Ap. ;  and  200  Cs.  Stand.  Cher.  We  find  that  we  lack  75 
cases  of  having  enough  Standard  Cherries  in  stock  to  fill  this  order.  We  have,  therefore, 
purchased  of  the  Eagle  Canning  Co.,  of  Marion,  O.,  on  account,  75  cases  of  cherries  of  same 
grade  at  $1.05  per  case. 

This  is  a  transaction  for  which  no  provision  has  been  made  in  the  Voucher  Payable 
Register  and  we  therefore  make  a  Journal  entry.     See  entry  for  Jan.  10,  page  33. 

C.  H.  Webster  &  Son  of  Hocking,  O.,  have  delivered  three  cars  of  coal,  215^,  22,  and 
23^  tons,  at  $1.25  per  ton.     Billed  Aug.  5,  at  30  days. 

We  have  sold  to  Farnham,  Blair  &  Co.  our  entire  stock  of  Canned  Tomatoes,  1250 
cases  "Perfection"  at  60c  and  985  cases  of  Standard"  at  40c  net.  They  hand  their  check  for 
$500  in  part  payment  and  their  60  day  acceptance  for  balance.   See  entry  for  Jan.  1 1,  page  33. 

Pay  Carter  &  Hall's  bill  for  stationery  and  minor  supplies  out  of  Petty  Expense  Fund. 
$12.25. 

The  Daily  Journal  Co.,  Hillsdale,  O.,  present  their  bill  of  Aug.  i,  for  printing  letter 
heads,  etc.,  and  for  ruling  and  binding  a  set  of  office  books,  $124.15.  Issue  Voucher  with 
payment.     Charge  this  and  any  future  expenditures  for  similar  purposes  to  General  Expense. 

The  firm  of  R.  C.  Noble  &  Co.,  Sharon,  Ind.,  has  made  an  assignment  and  the  receiver 
has  arranged  to  settle  with  creditors  at  75  per  cent.  We  accept  the  arrangement  and  re- 
ceive a  check  for  the  amount  due  us  on  this  basis,  and  close  the  account.  See  entry  for  Jan. 
14,  page  33. 

A.  F.  Scott,  Hillsdale,  O.,  presents  buyer's  checks  for  17  tons  of  Tomatoes  from  his 
farm  that  have  been  delivered  at  cannery ;  price,  $6.00  per  ton.    Proceed  as  heretofore. 

The  First  National  Bank  presents  for  collection,  Douglas,  Fenton  &  Co.'s  acceptance  of 
June  II,  1901,  (assumed  by  the  new  company)  in  favor  of  the  Ohio  Manufacturing  Co.  of 
Cleveland,  for  $621.50.    We  hand  the  bank  our  check  and  take  up  the  acceptance. 

We  have  purchased  of  Venable,  Davis  &  Brown,  wholesale  grocers  of  Pittsburg,  Pa., 
supplies  for  Canning  Dept.  (Miscellaneous)  amounting  to  $258.25.  The  goods  are  billed 
Aug.  2,  at  5-30  n-60. 

Stuart  &  Hall,  Aurora,  111.,  have  placed  an  order  at  fist  terms  for  40  Cs.  Pie  Peach.,  75 
Cs.  Perf.  Cher.,  50  Cs.  Perf.  Corn,  and  100  Bx.  Orch.  Peach. 

We  have  remitted  a  check  to  Braile  &  McKnight  for  their  bill  of  July  11  for  $329.70 

(rendered  to  Douglas,  Fenton  &  Co.  and  assumed  by  the  new  Company)  less  allowed  discount 

of  5  per  cent. 

Note — As  this  is  an  old  account,  a  voucher  would  not  be  used.  Enter  on  the  credit  side  of  the  Cash  Book, 
also  in  Mdse.  Dis.  Cr.  column.  Debit  the  firm  with  the  sum  of  the  remittance  and  discount  and  close  and 
rule  up  the  account. 

J.  H.  Rankin,  Beulah,  O.,  has  delivered  for  the  Drier  175  Bu.  Silver  White  Peaches  at 
the  contract  price,  75c  per  bu. ;  also  85  bu.  choice  Crawfords  for  the  Cannery  at  $1.15. 
Voucher  with  payment. 

We  have  sold  to  M,  C.  Anderson  for  Cash,  certain  refuse  products,  as  per  bills  present- 
ed by  the  foremen.  Those  from  Cannery  amount  to  $74.20,  and  those  from  the  Drier  to 
$50.55.  As  this  is  not  an  ordinary  sale  of  our  manufactured  products,  an  account  is  not 
opened  with  Mr.  Anderson.  Merely  credit  "Canned  Goods"  and  "Dried  Fruits"  with  the 
proper  amounts  in  the  Cash  Book. 

Geo.  P.  Morton  pays  Installment  No.  3  with  cash  in  full,  and  presents  his  Installment 
Certificates  with  a  request  for  the  issue  of  his  stock.    Proceed  as  instructed  on  page  6. 

J.  M.  Rice  &  Co.,  Louisville,  Ky.,  buy  a  trial  order  of  125  Cs.  Stan.  Peach.,  75  boxes 
Dia.  Apples,  and  40  Cs.  ea.  of  Straw.,  Blk.,  and  Rasp.  Jam.  The  goods  are  billed  at  30 
days  net,  and  charged  at  3  per  cent  less  than  list  prices. 


so  CORPORATION  AND  VOUCHER  ACCOUNTING. 

The  Directors  have  allowed  E.  P.  Moody  to  pay  Installment  No.  3  with  his  demand 
note  with  approved  security,  and  bearing  interest  at  6  per  cent.  Mr.  Moody  presents  the 
note,  and  his  stock  is  to  be  issued  at  once. 

C.  A.  Gregory  &  Co.  report  a  shortage  of  2  Cs.  Bk.  Beans  and  i  Cs.  Pears  in  our  ship- 
ment of  the  3rd,  verifying  their  statement  with  railway  freight  bills.  We  send  them  Memo, 
of  Credit  for  the  amount. 

The  Brandon  Co.,  Trenton,  N.  J.,  offer  us  a  special  discount  of  3  per  cent  from  the  face 
of  their  bill,  provided  we  will  make  immediate  settlement  in  Cash.  We  send  Voucher  with 
check  less  discount. 

John  Maxwell,  Clinton,  la.,  remits  cash  less  4  per  cent  discount  to  balance  account. 

Additional  insurance  policies  covering  property  belonging  to  the  company,  have  been  tak- 
en out  in  various  companies,  the  combined  premiums  on  which  amount  to  $78.20.  Paid  in 
cash. 

A  portion  of  the  Cannery  floor  gave  way,  and  the  accident  resulted  in  breakage  and 
other  damage  to  stock  amounting  to  $75.40.  Cash  was  paid  for  extra  labor  in  clearing  away 
the  wreckage,  packing,  etc.,  $15.60.     Charge  to  Loss  and  Gain.    Journal  entry. 

The  Chicago  Tinning  Co.  send  bill  of  Aug.  6  for  supplies  for  the  Cannery  tin  shop, 
amounting  to  $42.70.    Terms,  30  days  less  5  per  cent. 

The  Great  Northern  Hotel  Co.  of  Chicago,  have  purchased  at  list  terms  20  cases  each  of 
our  entire  line  of  Jellies. 

A.  T.  Melville  &  Co.  remit  cash  to  balance  account  less  allowed  discounts  and  Memo,  of 
Credit  sent  them  Aug.  3.  Deduct  shortages  allowed  on  bill  of  July  27,  before  computing  the 
discount. 

The  foreman  of  the  Drier  hands  in  charge  tickets  for  raw  products  transferred  to  Can- 
nery as  follows :    45  b'u.  Peaches  @  65c,  25  bu.  Apples  @  45c. 

The  Hillsdale  Hardware  Co.  present  bill  of  Aug.  9  for  25  Kegs  Nails  @  $2.55  for 
Cannery  Casing  department.     Voucher  with  payment. 

Pay  the  third  installment  on  your  own  stock  in  cash.  Issue  installment  certificate  and 
close  up  your  Installment  Ledger  Account,  after  which  issue  your  stock  in  three  certificates 
of  60,  40,  and  25  shares,  respectively,  properly  crediting  your  account  in  the  Stockholders' 
Ledger  for  each  certificate  issued. 

Note — As  Secretary  you  have  a  right  to  issue  your  own  Stock  Certificates  as  you  would  those  of  any 
other  stockholder,  provided  that  the  stock  has  been  paid  in  full  and  the  certificates  are  duly  countersigned 
by  the  president. 

S.  H.  Bannon  &  Co.  of  Syracuse,  O.,  order  at  list  terms  and  prices  150  Cs.  Perf.  Tomat., 
this  year's  crop.  We  are  short  50  cases  on  this  order  and  have  bought  the  required  quantity 
from  the  Eagle  Canning  Co.,  on  account  at  70c  net. 

C.  H.  Bell  &  Co.  report  six  boxes  of  the  peaches  sold  them  on  Aug.  3,  as  being  damaged 
and  unlit  for  sale,  and  ask  for  a  memoranda  o  f  credit  for  invoice  cost.  We  comply  with  their 
request. 

The  B.  &  O.  Ry.  presents  Freight  bill  for  week  ending  Aug.  10,  as  follows:  3  Cars 
Coal  C.  H.  W.  &  Co.,  Hocking,  O,,  $24.75;  Venable,  Davis  &  Brown,  Pittsburg,  Pa.,  $34.90; 
Chicago  Tinning  Co.,  $6.25.     Voucher  with  payment. 

Pro  rate  this  bill  among  the  accounts  involved  as  shown  by  the  Voucher  Record. 

Supt.  Barnes  presents  pay  roll  for  the  week  as  follows :  Canning  Dept.,  $2,025.60. 
Drier,  $714.75.    Proceed  as  heretofore. 

Pay  and  enter  up  the  weekly  salaries  for  the  same  amounts  as  last  week. 

Our  traveling  salesmen  report  expense  bills  for  week  ending  Aug.  3,  as  follows :  A.  W. 
Long,  $47.20;  Chas.  Baker,  $52.80;  J.  A.  Martin,  $38.75. 

We  have  paid  Mrs.  A.  W.  Long  $50  on  account  of  her  husband's  salary,  and  we  have, 
on  request,  remitted  J.  A.  Martin  $75  on  his  salary  account. 

All  amounts  due  on  Installment  No.  3  have  been  paid  in  cash.  Issue  the  required  stock 
certificates.  Close  the  several  accounts  in  the  Installment  Ledger,  and  open  the  required  ac- 
counts in  the  Stockholder's  Ledger. 

Post  the  books  to  date  and  take  a  Trial  Balance  of  the  Ledger. 
Note — Open  the  account  with  the  Eagle  Canning  Co.  in  the  General  Ledger. 

Prepare  a  schedule  of  the  balances  of  the  several  accounts  in  the  Sales  Ledger,  in  order  to 
see  if  their  total  agrees  with  the  balance  of  your  Sales  Ledger  Account.  Submit  these  to  your 
teacher  for  approval  before  continuing  your  work. 


MEMORANDA  FOR  AUG.  17.  51 


Memoranda  for  Aug.  17. 

A.  S.  Holloway,  Columbus,  O.,  orders  at  list  terms,  150  cases  Standard  Peaches. 

The  Buckeye  Manufacturing  Co.,  of  Cincinnati,  have  delivered  and  set  up  new  machin- 
ery in  the  Cannery,  as  per  bills  rendered,  Aug.  15,  amounting  to  $15,586.45.  These  bills 
have  been  duly  approved  by  the  proper  corporation  officials  and  filed.  We  issue  voucher 
with  N.  Y.  Draft  in  payment.  We  pay  $2.50  exchange  on  this  draft  which  is  charged  to 
Gen.  Expense  in  the  Cash  Book. 

We  have  been  awarded  the  contract  for  supplying  the  canned  goods  and  dried  fruits  re- 
quired by  the  Asylum  for  the  Insane  at  Kalamazoo,  Mich.  We  are  to  deliver  these  goods  at 
the  Asylum  storeroom  at  Kalamazoo  at  our  list  prices.  In  accordance  with  these  terms,  we 
have  shipped  per  their  order  of  Aug.  16,  50  cases  each,  of  our  Perfection  Peaches,  Pears, 
Blackberries,  Cherries,  and  Apples;  100  cases  each  of  Boston  Bk.  Beans,  "Perfection"  Corn, 
and  Perfection  Peas,  prepaying  the  freight  charges  in  cash,  amounting  to  $65.45.  Charge 
this  and  other  similar  freight  bills  to  the  Canned  Goods  Account. 

We  have  received  from  A.  T.  Casterlin  of  Benton  Harbor,  Mich.,  150  bu.  Peaches  @ 
$1.25  for  canning  and  90  bu.  Peaches  @  85  cents  for  Drier,  as  per  his  bill  of  Aug.  12,  we 
remit  voucher  with  Chicago  dft.  for  payment. 

We  have  sold  to  the  Eagle  Canning  Co.,  on  account  75  cases  Perfection  Green  Beans  at 

85  cents  net. 

Note— As  our  account  with  the  Eagle  Canning  Co.  is  in  the  General  Ledger,  the  entry  of  this  sale  should 
be  made  in  the  Journal,  and  not  in  the  Sales  Journal,  since  the  latter  book  is  exclusively  for  entries  that  are 
to  be  posted  to  the  Sales  Ledger. 

S.  H.  Arthur  &  Co.  settle  their  account  to  date  with  their  note  at  60  days. 

Pd.  Cash  from  Petty  Expense  fund  for  electric  light  fixtures,  $2.50;  a  dusting  brush, 
50  cents;  a  broom,  35  cents;  and  a  floor  sprinkler,  40  cents. 

We  have  handed  the  First  National  Bank  our  check  to  pay  Douglas,  Fenton  &  Co.'s  note 
of  May  19  (assumed  by  the  company)  in  favor  of  Seymour  &  Co.,  Chicago,  for  $649.20 
with  90  days'  interest  at  7  per  cent. 

Remitted  Chas.  Baker  on  account  of  salary,  $125. 

Sell  25  shares  of  your  C.  C.  &  D.  Co.  stock  to  M.  F.  Coe  of  Newbury,  Ind. 

Note — As  this  is  a  transaction  concerning  yourself  personally,  no  entry  in  the  Operating  Books  is  re- 
quired.   Transfer  the  stock  to  Mr.  Coe,  as  instructed  on  page  7. 

A  called  meeting  of  the  stockholders  was  held  on  this  date  to  consider  the  matter  of 
purchasing  from  the  owner,  J.  S.  Henderson,  the  site  and  buildings  at  present  occupied  by 
the  company.  All  stockholders  were  present  except  Mr.  Martin  and  Mr.  Nelson.  The  Sec- 
retary, at  the  request  of  the  President,  read  a  communication  from  Mr.  Henderson  in  which 
he  offered  to  give  a  warranty  deed  to  the  property,  free  of  all  taxes  and  other  incumbrances, 
for  the  sum  of  $50,000  in  Cash.  Mr.  Fenton  offered  a  resolution  in  favor  of  the  -proposed 
purchase  and  addressed  the  meeting  in  favor  of  accepting  Mr.  Henderson's  proposition. 

Several  stockholders  spoke  on  the  question,  some  favoring  and  some  opposing  the  pro- 
posed investment.  Mr.  Douglas  moved  that  the  vote  be  by  ballot,  and  that  the  result  be 
spread  upon  the  minutes.  The  stockholders  cast  votes  as  per  shares  held  by  them,  as  fol- 
lows : — 

^    For  the  purchase,  Messrs.  Fenton,  Hanlon,  Barnes,  Student,  and  Morton. 

Against  the  purchase,  the  remainder  of  the  stockholders  present.  Mr.  Fenton  held  a 
proxy  from  Mr.  Martin  and  voted  his  shares  in  favor  of  the  resolution.  Mr.  Douglas  held 
Mr.  Nelson's  proxy  and  voted  his  shares  against  the  purchase.  After  the  matter  of  the  Hen- 
derson purchase  had  been  disposed  of,  it  was  moved  by  Mr.  Douglas  that  the  reserved  Treas- 
ury Stock,  provided  for  by  the  Articles  of  Incorporation,  be  placed  on  the  market,  the  same 
to  be  held  open  for  sale  under  such  regulations  as  may  be  made  by  the  Board  of  Directors; 
provided,  that  none  of  this  stock  be  sold  at  less  than  10  per  cent  below  its  par  value.  After 
some  discussion  this  motion  was  carried  unanimously.  No  further  business  was  transacted 
at  the  stockholder's  meeting,  but  upon  its  adjournment,  a  meeting  of.  the  Board  of  Directors 
was  at  once  held,  a  full  board  being  present.  Director  Moore  offered  a  resolution  to  the  ef- 
fect that  the  Treasury  Stock  should  be  offered  for  sale  to  the  public  under  the  following 
conditions : — 

First,  that  a  cash  payment  of  not  less  than  25  per  cent  be  required  on  all  stock  sold,  with 


52 


CORPORATION  AND  VOUCHER  ACCOUNTING. 


secured  notes  or  other  securities  approved  by  the  President  and  Treasurer  of  the  Company 
for  the  balance,  said  notes  to  bear  6  per  cent  interest. 

Second,  that  for  the  present,  stock  which  is  to  be  paid  for  in  full  in  cash  be  offered  at 
5  per  cent  below  par. 

The  resolution  was  carried  without  dissent. 

On  motion,  the  Secretary  was  instructed  to  close  the  books  and  prepare  a  financial  state- 
ment, exhibiting  the  state  of  the  business  at  the  close  of  the  week  ending  Aug.  17,  with  a 
view  to  ascertaining  if  the  results  of  the  first  month's  business  would  justify  the  declaring  of 
a  dividend.     Meeting  then  adjourned. 

Write  up  the  minutes  for  both  meetings,  giving  a  schedule  of  the  votes  cast  by  the  stock- 
holders at  the  stockholders'  meeting,  and  the  majority  jn  favor  of  the  purchase  of  the  Hen- 
derson property. 

Prepare  for  booking  sales  of  Treasury  Stock  by  making  the  Journal  entry  as  instructed 
on  page  22. 


No.       E.  176 


VOUCHER  CHECK. 


Amount   $451.39 


If  this  voucher  does  not  agree  with  your  books,  return  WITHOUT  ALTERATION  and  state  differencf 

T.  M.  SINCLAIR  i&  CO..  Ltd.      ^^V  ^^  ^^^  ^''^^r  of            H.  S.  Potter  &  Co., 
Cedar  RapidSr  Iowa.                                              128  Dearborn  St.,  Chicago 

i. 

190  / 

Four  Hundred  Fifty-one        ^%%    DOLLARS 

May 

7 

Mdse.  per  Invoice  of  April  28,  30d 

475115 

Less  5  per  cent 

23 

76 

451  39 

Examined: 


R.  Sinclair, 


Approved:. 


C.  P.  Carter. 


Secretary. 


Treasurer. 


$        451.39  Date  Chicago.  May  28, \QQ     1 

Received  from  T.  M.  SINCLAIR  &  CO.  LTD..  Cedar  Rapids,  Iowa, 

Four  Hundred  Fifty-one     , i^^^g     DOLLARS 


being  in  payment  of  above  account. 


H.  S.  Potter  &  Co., 


Per  J.  N.  P. 


Payee. 


Special  Notice— Receipt  only  by  those  having  authority,  and  in  ink.  ■    Paying  bank  will  not  ac- 
cept unless  conditions  are  complied  with. 

PAYEE  SHOULD  ALSO  ENDORSE. 


MEMORANDA  FOR  AUG.  17.  .53 


Form  for  Endorsement  on  bacK  of  Voucher  Check, 

fJn         E  176  Endorsement  should  appear  belo-w. 
„.      ^„,^.,  .,  ,■«     «     ^^      -r  ■■  1                       '  H.  S.  Potter  &  Co.. 

T.  H.  SINCLAIR  &  CO.  Ltd.,  Perj.N.p. 

Cedar  Rapids,  Iowa. 

Payable  to  H.  S.  Potter  &  Co., 

128  Dearborn  St.,  Chicago. 


or  order. 


The  Commercial  Exchangfe  Bank  of  New  York 
will  pay  the  amount  of  this  Voucher  when  properly 
signed  and  endorsed. 

Voucher  Check.  Many  large  concerns  make  their  payments  by  means  of  a  com- 
bination check  and  voucher,  which  is  known  as  a  "Voucher  Check."  It  consists  of  an  or- 
dinary voucher  on  the  back  of  which  is  an  order  to  a  designated  bank,  authorizing  the  pay- 
ment of  the  voucher  to  the  payee  or  his  order,  when  properly  countersigned  by  the  firm  issu- 
ing it  and  receipted  by  the  firm  to  whom  it  is  payable. 

The  payee  is  required  to  endorse  the  check  when  he  receives  payment,  after  which  the 
instrument  is  returned  by  the  bank  to  the  drawer,  as  in  the  case  of  an  ordinary  check. 

The  use  of  the  voucher  check  saves  the  making  out  of  ordinary  checks,  relieves  the 
payee  of  the  necessity  of  returning  the  voucher,  and  saves  the  trouble  of  subsequently  at- 
taching together  the  voucher  and  check,  which  is  often  done  when  these  are  issued  as  sepa- 
rate papers. 

The  accompanying  form  illustrates  the  voucher  check  as  it  is  used  by  one  of  the  great- 
est manufacturing  concerns  in  the  West. 

Hereafter,  you  are  to  use  voucher  checks  for  all  payments  requiring  the  issue  of  vouch- 
ers. A  book  of  voucher  checks  will  be  found  in  your  equipment.  In  issuing  them,  fill  out 
all  forms  completely,  with  the  exception  of  the  receipt  which  is  filled  out  by  the  person  re- 
ceiving the  voucher  check,  and  before  he  presents  it  at  the  bank  for  payment. 

Adams  &  Robinson,  the  Company's  attorneys,  present  their  bill  dated  Aug.  i,  for  their 
services  in  connection  with  the  organization  of  the  Company,  $25.     Issue  voucher  check. 

O.  C.  Oliver  &  Co.  order  at  list  terms,  75  cases  Perfection  Tomatoes,  100  cases  Stand- 
ard Peas,  and  45  boxes  Diamond  Peaches. 

The  purchase  of  the  J.  S.  Henderson  property  has  been  duly  consummated,  and  the 
company's  certified  check  for  the  purchase  price,  $50,000,  has  been  handed  to  the  former 
owner.    Charge  the  amount  to  Plant  in  Cash  Book. 

We  have  taken  out  additional  insurance  policies  on  the  Plant,  the  premiums  on  which, 
amounting  to  $75.80,  have  been  paid  in  cash. 

We  have  sold  to  A.  T.  Melville  &  Co.  at  30  days  net,  our  remaining  stock  of  Dried 
Peaches  of  last  year's  crop,  275  Boxes,  "Diamond"  at  7  cents  and  125  Boxes  "Orchard"  at 
$}4  cents.  n    75  shares  of  his  company  stock.     Proceed 

James  Douglas  has  sold  to  A.  W.  Nelso 
as  instructed  on  page  7. 

The  Cedar  Creek  Milling  Co.  of  Alma,  O.,  have  delivered  at  the  Drier  box  shop,  20  M. 
ft.  Poplar  boards,  @  $14.50.  Bill  of  Aug.  15  ;  terms,  30  days  net.  Make  out,  but  do  not  de- 
liver voucher. 

Chas.  A.  Shaw,  568  State  St.,  Chicago,  has  bought  50  shares  of  Treasury  Stock  in  ac- 
'cordance  with  the  terms  prescribed  by  the  Board  of  Directors,  and  remits  a  certified  check 
for  25  per  cent  of  the  amount,  and  his  approved  note  at  60  days  for  the  balance.  (Journal 
Entry).     Issue  the  stock  and  make  necessary  entry  in  Stockholder's  Ledger. 


54  CORPORATION  AND  VOUCHER  ACCOUNTING. 

Our  buyer,  Mr.  Moody,  presents  certificates  for  purchase  of  raw  products  as  follows : 
Cannery,  $1775.25.     Drier,  $856.20.     Issue  voucher  check. 

An  invoice  of  miscellaneous  supplies  for  the  Cannery  has  been  received  from  the  Union 
Spice  Co.  of  Philadelphia,  as  per  their  bill  of  Aug.  8th,  $72.15.    Terms  5-30. 

Note — Do  not  compute  discount  or  fill  out  check  part  of  voucher  till  maturity. 

One  hundred  bushels  of  apples  purchased  for  the  Drier  at  50  cents  per  bu.  have  been 
transferred  to  the  Cannery. 

Stewart  &  Hall  have  remitted  cash,  less  5  per  cent,  to  balance  their  account  with  Doug- 
las, Fenton  &  Co.,  the  amount  of  which  was  $247.50  before  discount. 

Owing  to  a  general  advance  in  the  prices  of  food  products,  it  has  been  decided  to  revise 
the  Quotation  List  and  increase  prices.  Hereafter  use  Quotation  List  No.  2,  for  all  sales. 
Put  "Quotation  List  No.  i"  away  where  it  cannot  be  used  by  mistake  instead  of  the  other. 

We  have  sold  to  John  Maxwell,  Clinton,  Iowa,  at  60  days,  50  Cs.  Stand.  Cher.,  100  Cs. 
each  of  Per.  Corn  and  Tomat.,  and  25  Box  Orch.  Pears.  He  is  to  pay  our  revised  prices- 
with  a  discount  of  5  per  cent  off  if  payment  be  made  within  30  days. 

The  Great  Northern  Hotel  Co.  remit  cash  to  balance  account  less  allowed  discount. 

C.  R.  Jones,  495  Main  St.,  Cincinnati,  O.,  has  purchased  75  Shares  of  Treasury  Stock 
at  5  per  cent  discount  paying  cash  for  the  same.    For  required  entry  see  page  19. 

P.  Harrington  presents  bill  for  drayage  to  date,  $62.25.    Voucher  Check. 
-  We  have  sold  to  the  Graham  Grocery  Co.  at  list  prices,  less  5  per  cent  for  cash  in  30- 
days,  60  days  net,  200  Cs.  Perf.  Tomatoes,  50  Cs.  each  of  Rasp.,   Straw.,  and  Blk.  Jam, 
and  75  Bx.  Dia.  Peaches. 

The  Ohio  Lumber  Co.  buy  of  us  on  account  7500  ft.  of  rough  pine  at  $9.50  per  M., 
bought  originally  for  the  Casing  Dept.  of  the  Cannery  but  which  was  found  unsuitable  for 
the  purpose  intended.     (Journal.) 

E.  P.  Moody  has  bought  25  shares  of  Treasury  Stock  at  par,  paying  25  per  cent  in  cash 
and  his  note  for  the  balance  with  approved  security. 

Sold  to  C.  A.  Gregory  &  Co.  at  list  terms :  75  Cs.  B.  Bk.  Beans;  125  Cs.  Perf.  Corn; 
125  Cs.  Perf.  Tomat.;  100  Cs.  Perf.  Peas,  and  40  Bx.  Orch.  Peach. 

We  have  sold  to  the  Great  Northern  Hotel,  at  list  prices  net  F.  O.  B.  Chicago:  15  Cs. 
each  Blk.,  Straw.,  Rasp  and  Cr.  Ap.  Jam.  The  freight  charges  are  $7.25  which  we  prepay 
in  cash. 

Chas.  T.  Fenton  buys  50  shares  of  Treasury  Stock  at  5  per  cent  less  than  par,  paying 
for  the  same  in  cash. 

A.  B.  Holloway  remits  cash  in  payment  of  our  bill  of  Aug.  3,  and  prepaid  expressage, 
less  allowed  discount,  on  merchandise  charge. 

The  Morgan  Evaporator  Co.,  Cleveland,  O.,  have  delivered  and  set  up  machinery  for 
the  Drier,  as  per  their  bill  of  Aug.  i6th  amounting  to  $7946.75.    Terms,  5-30  n-60. 

The  Kalamazoo  Asylum  sends  us  a  bill  for  $8.25  for  drayage  paid  by  them  on  our  re- 
cent shipment.    We  remit  cash  for  the  amount. 

Note — In  ordinary  mercantile  business,  a  payment  of  this  kind  would  probably  be  adjusted  by  simpl}'  de- 
ducting the  charge  from  the  amount  of  the  bill  when  the  remittance  is  made.  But  when  the  Voucher  System 
is  used  (as  is  the  case  in  most  State  and  Government  institutions)  the  necessity  for  agreement  of  amounts  in 
the  bill,  with  the  voucher,  and  the  check  by  which  it  is  paid,  requires  that  drayage,  or  other  items  of  a  similar 
character,  be  treated  as  separate  charges,  which  are  adjusted  before  the  seller's  bill  is  audited  and  paid. 

The  Supt.  files  pay  roll  for  the  week:    C.  Goods  Dept.,  $2244.70;  Drier,  $821.40. 

On  account  of  ill  health,  our  traveling  agent,  A.  W.  Long,  has  resigned.  He  presents 
his  expense  bill  for  the  week  for  $41.15.  We  issue  voucher  with  payment  for  this  bill,  after 
which  we  hand  him  a  check  for  one  month's  salary,  less  what  has  already  been  paid  him. 
Make  a  Journal  entry  "General  Expense  to  A.  W.  Long"  crediting  him  one  month's  salary, 
then  post  and  close  his  account. 

Note — Separate  Cash  Book  entries  should  be  made  for  the  voucher  and  the  salary  payment. 

Chas.  Baker  reports  weekly  expense  bill  for  $49.10  and  requests  a  payment  of  $50  on 
salary  account.    Voucher  and  check  are  sent  liim  for  the  required  amounts. 

J.  A.  Martin  forwards  expense  bill  for  $39.60.     Voucher. 


INSTRUCTIONS  FOR  FIRST  CLOSING.  55; 

The  B.  &.  O.  Ry.  freight  bill  for  the  week  is  as  follows : — 

Buckeye  Manf.  Co.,  Cincinnati,  Machinery,  etc $92.15 

A.  T.  Casterlin,  Benton  Harbor,  Mich.,  240  bu.  Peaches 84. 

Union  Spice  Co.,  Phila.,  Mdse 6.25, 

Morgan  Evap.  Co.,  Cleveland,  Machinery,  etc 59-20 

Proceed  as  with  previous  freight  bills,  properly  pro  rating  the  amount  among  the  sev- 
eral accounts  affected  and  issue  Voucher  Check. 

Note — The  freight  on  the  peaches  should  be  apportioned  according  to  the  number  of  bushels,  not  to  the 
cost. 

Credit  Chas.  Baker  and  J.  A.  Martin  each  with  one  month's  salary. 

Pay  the  usual  office  salaries  for  the  week. 

Post  the  books  and  prepare  trial  balance. 

You  are  now  to  effect  a  general  closing  of  the  books  for  the  purpose  of  ascertaining  the 
present  financial  condition  of  the  concern,  and,  should  results  justify  it,  to  distribute  accrued 
profits  by  means  of  a  dividend.  In  ordinary  business  this  would  usually  be  deferred  until  the 
close  of  the  season,  but  should  it  appear  that  the  business  of  the  concern  had  been  profitable^ 
sound  financial  reasons  might  exist  for  declaring  a  dividend  at  once.  Thus  the  prosperity 
evidenced  by  the  declaring  of  a  substantial  dividend,  might  give  a  desirable  stimulus  to  the 
market  value  of  the  Treasury  Stock,  or  help  to  establish  the  credit  and  business  standing  of 
the  company. 

After  your  Trial  Balance  has  been  approved  by  your  teacher,  you  may  proceed  to  prepare 
a  financial  statement,  or  balance  sheet,  and  close  the  books  in  accordance  with  the  follow- 
ing :— 

Instructions  for  First  Closing. 

The  model  Trial  Balance  and  Statement,  on  page  56  and  57,  with  the  exception  of 
amounts  are  identical  with  those  required  for  this  closing.  It  will  be  well  for  you  to  stud}'" 
them  somewhat,  before  proceeding  to  prepare  your  own  statement. 

Observe  that  the  balances  of  the  Franchise  and  Treasury  Stock  accounts  are  listed 
among  the  resources,  that  the  total  Capital  Stock  is  listed  as  a  liability,  and,  that  the  general 
balance  of  the  resources  and  liabilities,  as  thus  listed,  constitutes  the  net  gains  of  the  busi- 
ness. Notice  how  the  several  department  accounts  of  Canned  Goods  and  Dried  Fruits  are 
combined,  so  as  to  show  the  total  inventories,  cost,  receipts,  and  gains  for  each  of  these  two 
main  departments  of  the  business.  These  totals,  as  given  under  the  Schedule  of  Gains  and 
Losses,  are  obtained  by  combining  the  amounts  of  the  department  accounts  as  listed  in  the 
Trial  Balance. 

Notice  that  the  gain  on  the  Interest  Account  is  obtained  by  adding  the  accrued  interest 
payable  to  date,  to  the  total  debits,  and  subtracting  the  result  from  the  sum  of  the  credits  and 
the  accrued  interest  receivable.  Observe  that  the  question  as  to  the  gain  or  loss  on  the  in- 
terest account  for  any  business  period,  depends  not  on  whether  we  owe  more  interest  than  is . 
owed  to  us,  but  on  whether  more  interest  payable  or  more  interest  receivable,  has  accrued 
since  the  last  closing  of  the  books. 

When  satisfied  that  you  understand  the  methods  involved  in  the  model  statement,  you 
may  proceed  to  the  preparation  of  your  own  statement,  assuming  the  following  inventor- 
ies:— 

Canned  Goods   $21568.50 

"  "     Raw  Product 347-20 

"  "     Casing   258.60 

"  "     Miscellaneous   821.15 

Dried  Fruit 1243.25 

"  "     Raw  Product 356.20 

"  "     Casing   I54-90 

Fuel 95.75 

Interest  Receivable   79-50 

Interest  Payable 187.50 

Plant  (at  cost)   , 153585. 


56 


CORPORATION  AND  VOUCHER  ACCOUNTING. 


When  your  statement  is  prepared,  submit  it  to  your  teacher  for  approval. 

Your  statement  having  been  submitted  to  a  called  meeting  of  the  Board  of  Directors, 
after  due  consideration,  they  decide  to  declare  a  dividend  of  three  per  cent  on  the  issued 
Stock,  the  same  to  be  payable  in  cash,  on  or  before  Aug.  24,  1901,  and  instruct  the  Secre- 
tary to  prepare  a  Dividend  List  and  remit  by  check  the  amounts  due  the  several  stockholders 
as  shown  by  the  Corporation  Books. 

Write  the  minutes  of  this  meeting,  after  which  close  the  book,  proceeding  as  follows : — 

1.  Enter  in  red  ink  all  inventories  in  the  respective  accounts. 

2.  Prepare  on  a  loose  sheet  of  Journal  paper,  entries  for  closing  the  several  accounts 
of  the  General  Ledger,  as  indicated  by  the  accompanying  model  entries,  which  are  those  re- 
quired for  the  Model  Statement,  page  57. 

Canned  Goods 17161.50 

,  C.  G.  Raw  Product 6846.45 

"     "  Casing 686.05 

"     "  Miscel 1506.55 

"     "  Labor 8122.45 

Entry  for  closing  Canned  Goods  Dept.  accounts. 

Note — The  credit  items  of  this  entry  are  the  several  balances  of  the  Canned  Goods  Dept.  Accounts  AF- 
TER the  inventories  HAVE  BEEN  ENTERED.  The  entry  for  closing  the  Dried  Fruit  Deot.  Accounts  is 
obtained  in  the  same  way. 

Dried  Fruit 5646.41 

Dr.  Fr.  Raw  Product 2480.41 

"     "     Casing 41975 

"     "     Labor 2746.25 

Entry  for  closing  Dr.  Fr.  Dept.  Accounts. 


Model  Trial  Balance,  Aug.  17. 


Cash 

15172 

33 

Capital  Stock 

250000 

Treas.  Stock 

50000 

20000 

Franchise 

20941 

26 

Plant 

153641 

20 

Canned  Goods 

2812 

55 

7062 

15 

"                ■'  Raw  Prod. 

7258 

90 

71 

20 

"   Casing 

1015 

60 

68 

40 

"                "  Miscel. 

2341 

75 

"                "  Labor 

8122 

45 

Dried  Fruit 

571 

16 

6721 

35 

Raw  Prod. 

2915 

90 

86 

24 

"          "          Casing 

582 

50 

"          "          Labor 

2746 

25 

Vouchers  Payable 

42816 

25 

53638 

70 

Fuel 

342 

06 

General  Expense 

2618 

20 

Petty 

50 

Mdse.  Disc. 

91 

42 

153 

70 

Bills  Receivable 

16295 

80 

702 

30 

Bills  Payable 

1321 

45 

2216 

50 

Interest 

75 

21 

192 

45 

Sales  Ledger 

15894 

20 

7325 

60 

Chicago  Tin  Co. 

192 

15 

J.  A.  Martin 

125 

150 

Eagle  Can  Co. 

62 

95 

115 

80 

Loss  and  Gain 

178 

30 

Ohio  Lumber  Co.                                                    , 

75 

60 

96 

75 

Stock  Discounts  and  Premiums 

650 

Chas.  Baker 

/ 

200 
348918 

125 
348918 

29 

29 

MODEL  STATEMENT,  AUG.  17. 


57 


Model  Statement,  Aug.  17, 


RESOURCES. 

^ 

Cash 

15172 

33 

Plant  Inventoried  at  cost 

153641 

20 

C.  Goods                                                Invt.' 

$21632.56 

C.  Goods  Raw  Prod. 

341.25 

"       "         Casing                                         " 

261.15 

Miscel. 

835.20 

23070 

16 

Dr.  Fruit 

1251.16 

"        Raw  Prod. 

349.25 

"        "        Casing                                        " 

162.75 

1763 

16 

Fuel 

97 

30 

Bills  Receivable 

15593 

50 

Sales  Ldger,  Acct. 

8568 

60 

Interest  Rec.  (Accrued  to  date) 

81 

20 

Petty  Expense  (Unexpended) 

9 

15 

Chas.  Baker  (Salary  overdrawn) 

75 

Treasury  Stock  (Unsold) 

30000 

, 

Franchise 

LIABILITIES 

20941 

26 

269012 

86 

Capital  Stock 

250000 

Vouchers  Payable 

10822 

45 

Bills 

895 

05 

Interest          "          (Accrued  to  date) 

192 

25 

Chicago  Tin  Co. 

192 

15 

Eagle  Canning  Co. 

52 

85 

Ohio  Lumber  Co. 

21 

15 

J.  A.  Martin  (Salary  Account) 
Bal.  Net  Gain 
Schedule  of  Gains  and  Losses. 

25 

262200 

90 

6811 

96 

• 

GAINS 

C.  G.  Dept.  Credits              $   7201.75 

"       Invt.                    23070.16 

$30271.91 

"      Cost 

21551.25 

"          "      Gains 

8720 

66 

Dr.  Fr.  Dept.  Credits          $  6807.59 

Invt.                   1763.16 

$  8570.75 

Cost 

6815.81 

"             "        Gains 

1754 

94 

Interest  Credits  and  Inventory 

$  273.65" 

Interest  Debits  and  Inventory 

267.46 

Interest  Gains 
Mdse.  Discount 

LOSSES. 

6 
62 

19 
28 

10544 

07 

Gen.  Expense 

2618 

20 

Petty  Expense  Reserved 

$  50.00 

Unexpended 

9.15 

"          "          Loss 

40;85 

Fuel  Cost 

$342.06 

"     Invt. 

97.30 

"     Loss 

244'76 

Loss  and  Gain 

178  30 

Stock  Prem.  and  Dis 

Bal.  Net  Gain 

650| 

3732 

11 

1 

681196 

\ 

1         •         1 

58  CORPORATION  AND  VOUCHER  ACCOUNTING. 

Canned  Goods  8720.66 

Dried  Fruit : 1754.94 

Interest 6. 19 

Mdse.   Disc 62.28 

'  Loss  and  Gain 10544.07 

For  closing  accounts  showing  gains. 

Loss  and  Gain 3553-8i 

General  Expense 2618.20 

Petty  Expense   40.85 

Fuel 244.76 

Stock,  Disc,  and  Prem 650. 

For  closing  accounts  showing  losses. 

Loss  and  Gain 681 1.96 

Dividend  No.  i    6600. 

Surplus 211 .96 

For  balance  of  L.  &  G.  carried  to  Surplus  Account  and  Dividend  No.  i, 
for  dividend  of  3  per  cent  on  issued  Capital  Stock  $220,000. 

"When  your  closing  entries  have  been  approved  by  your  teacher,  copy  them  inte  your 
Journal,  post  them  to  the  Ledger,  rule  up  the  several  accounts,  and  bring  down  all  inven- 
tories. 

Note — It  is  unnecessary  to  close  the  other  ledger  accounts,  but  this  may  be  done  in  any  case  when  the 
totals  for  forwarding  are  inconveniently  large,  as  in  the  case  of  the  Sales.  Ledger,  Bills  Receivable,  Vouch- 
ers Payable  and  a  few  other  accounts.  Should  it  be  found  desirable  to  balance  and  close  any  of  these  ac- 
counts, it  may  be  done  without  making  Journal  entries.  It  is  in  accord  with  the  latest  accountancy  practice, 
however,  to  employ  Journal  entries,  when  closing  the  several  financial  accounts  at  the  conclusion  of  a  business 
period. 

Before  beginning  the  records  of  the  new  business  period,  prepare  a  Preliminary  Trial 
Balance,  in  order  to  be  assured  that  the  books  are  in  balance.  Mistakes  may  have  occurred  in 
forwarding  the  balances,  etc.  Before  preparing  this  Trial  Balance,  be  sure  that  all  inventories 
or  balances  are  properly  brought  down.  When  the  Trial  Balance  is  prepared,  submit  it  to 
your  teacher  for  approval,  after  which  continue  business  as  follows : — 

Memoranda  for  WeeK  Ending  Aug.  24. 

The  Cash  dividend  of  three  per  cent  on  the  issued  stock  is  to  be  distributed  in  accord- 
ance with  the  vote  of  the  Board  of  Directors.  Enter  in  the  Dividend  Book,  as  shown  on 
page  17,  crediting  each  stockholder  with  the  sum  to  which  he  is  entitled  as  shown  by  the 
number  of  shares  standing  to  his  credit  in  the  Stockholders'  Ledger.  Assuming  that  checks 
have  been  drawn  and  remitted  to  the  several  Stockholders,  make  a  credit  entry  in  the  Cash 
Book,  charging  "Dividend  No.  i,"  with  the  amount  of  the  dividend,  post  this  entry,  and 
properly  rule  up  the  account. 

We  have  received  from  the  Kalamazoo  Asylum  their  voucher  with  check  for  our  invoice 
of  Aug.  17th. 

Voucher  No.  15,  favor  Chicago  Sugar  Refining  Co.,  has  been  paid  with  Chicag®  dft. 
less  the  discount  to  which  we  are  entitled  by  the  terms  of  sale. 

Arthur  Moore  hands  us  cash  for  his  note  given  July  27,  in  payment  of  the  first  install- 
ment of  his  stock,  with  6  per  cent  interest  to  date. 

The  Cleveland  Fruit  Co.  of  Cleveland,  O.,  present  bill  of  Aug.  20  for  125  Bu. 
Peaches  at  95c.  50  Bu.  of  this  fruit  is  turned  into  the  Drier  and  the  remainder  to  the  Can- 
nery.    (Voucher  Check.) 

The  Great  Northern  Hotel  Co.  remit  Cash  to  balance  account. 

We  have  purchased  of  Braille  &  McKnight,  St.  Louis,  terms  5-30,  tinning  supplies  for 
Cannery  as  per  bill  rendered  Aug.  22,  for  $149.64. 

We  have  sold  Angell  &  French,  Cleveland,  O.,  at  list  terms,  150  Cs.  Stan.  Cher.;  75 
Cs.  B.  Bk.  Beans;  and  40  Cs.  each  of  our  full  line  of  jellies. 


MEMORANDA  FOR  AUG.  24.  59 


We  have  received  from  R.  S.  Cox  of  Monmouth,  O.,  a  shipment  of  385  Bu.  White 
Beans,  and  his  bill  for  same  at  $1.75  per  bushel,  dated  Aug.  17.    Voucher  Check. 

C.  A.  Gregory  &  Co.  remit  Cash  in  payment  of  our  invoice  of  Aug.  3,  less  allowed  dis- 
count and  our  memorandum  of  credit  of  Aug.    10. 

Pay  to  Ohio  Telephone  Co.  telephone  rent  to  Aug.  r,  $4.75,  out  of  Petty  Expense  Fund. 

Farnham,  Blair  &  Co.  hand  us  Cash  to  balance  their  account  to  date. 

Sold  to  Marvin  &  Wright,  at  list  terms,  75  Cs.  Pie  Peach. ;  50  Cs,  Pie  Blk.  and  40  Cs. 
each  of  Stan.  Pears  and  Cher.  They  remit  with  this  order  a  check  for  such  a  sum  as  will 
entitle  them  to  a  credit  of  $400. 

The  Treasurer  of  the  company  hands  you  a  check  for  $25  for  Petty  Expense  Fund. 

A.  J.  McCoy  pays  his  note  of  Apr.  26,  1901,    favor    of    Douglas,    Fenton    &    Co.    for 

$126.55,  with  interest  from  date  at  6  per  cent. 

Note — In  computing  the  interest,  find  the  time  by  taking   the    exact    number    of    days    from    Apr.    26    to 
Aug.  24. 

M.  C.  Anderson  buys  on  account  at  30  days,  refuse  products  of  the  Cannery  amounting 
to  $65.20,  and  of  the  Drier  $38.75.  As  this  is  not  a  Sales  Ledger  account,  make  Journal 
entry. 

The  Delavan  Machine  Co.,  Hillsdale,  O.,  present  their  bill  of  Aug.  20,  for  repairs  on 
machinery  $19.60.  Hereafter,  unless  otherwise  directed,  issue  Voucher  Checks  for  all  bills 
presented  except  those  for  time  purchases.  Use  your  judgment  as  to  the  accounts  to  be 
charged. 

At  a  meeting  of  the  Board  of  Directors,  held  on  Aug.  19,  it  was  decided  to  sell  no  more 
Treasury  Stock,  except  at  a  premium  of  5  per  cent,  payment  to  be  made  in  cash,  or  in 
first  class  securities.  Supt.  Barnes  recommended  that  Henry  Simpson  be  employed  as  night 
watchman  in  place  of  J.  Ryan,  who  failed  to  report  for  duty,  at  a  salary  of  $15  per  week,  his 
employment  to  date  from  Aug.   17.     The  desired  action  was  taken. 

Write  the  minutes  of  this  meeting. 

On  Aug.  18  a  small  fire  occurred  in  the  Cannery  warehouse.  The  losses  as  adjusted  by 
the  Mutual  Ins.  Co.  are  as  follows : — 

Building  $75,  15  cases  Cr.  Ap.  Jel.  at  list  prices,  several  barrels  of  sugar  (partial 
damage)  $15.  The  entire  amount  has  been  remitted  by  check.  Enter  in  Cash  Book  credit- 
ing "Plant,"  "C.  Goods"  and  "C.  G.  Miscel." 

The  Kalamazoo  Asylum  has  ordered  at  list  prices,  net,  15  Cs.  each  of  Rasp,  and  Straw. 
Jam,  and  15  Cs.  Blk.  Jel.,  5  Cs.  Stan.  Ap.  B.,  and  20  Cs.  each  of  Rasp,  and  Cr.  Ap.  Jel.  We 
have  prepaid  freight  and  drayage  in  cash,  $37.90. 

The  Graham  Grocery  Co.,  Hannibal,  Mo.,  remit  Chicago  draft  for  their  acceptance  of 
July  25,  $456.80. 

We  have  received  from  A.  C.  Marmadake  &  Co.,  Columbus,  O.,  a  shipment  of  nails 
and  other  hardware  for  our  Drier  Casing  Department,  per  their  bill  of  Aug.  16  amounting  to 
$71.56.     The  goods  are  billed  at  30  days,  less  5  per  cent  if  paid  at  maturity. 

Sixty  bushels  of  Pears,  costing  45c  per  bu.,  have  been  transferred  from  the  Drier  to  the 
Cannery. 

Douglas,  Fenton  &  Co.'s  note  of  July  i,  1901,  for  $428.60  in  favor  of  Eugene  Barlow 
&  Sons,  with  interest  at  6  per  cent  from  date,  has  been  paid  in  Cash. 

We  have  paid  Voucher  No.  16,  favor  Ohio  Lumber  Co.,  with  N.  Y.  dft. 

S.  A.  Rogers  &  Co.'s  bill  of  Aug.  21  for  stationery,  etc.,  $4.25,  has  been  paid  out  of 
Petty  Expense  fund. 

We  have  sold  to  Stuart  &  Hall  at  list  terms,  45  Bx.  Orch.  Peach. ;  125  Cs.  Perf. 
Tomat. ;  100  Cs.  Perf.  Gr.  Beans;  and  50  Cs.  Stan.  Peas. 

A.  B.  Hillis,  Hillsdale,  O.,  has  purchased  25  shares  of  Treasury  Stock  at  5  per  cent 
premium  giving  his  60  day  note  for  the  same  with  approved  security. 

We  pay  with  voucher  check  the  bill  of  Aug.  23,  rendered  by  L.  B.  Morley  &  Sons, 
Hillsdale,  O.,  for  repairing  damage  to  building,  caused  by  fire,  $62.45.  Debit  "Plant,"  as 
this  account  was  credited  with  the  insurance. 

We  have  sold  to  T.  C.  McLean  &  Co.  of  Hillsdale,  O.,  the  following  goods,  at  a  dis- 
count of  6  per  cent  from  our  list  prices ;  they  pay  $250  in  cash  and  hand  us  their  acceptance 
at  30  days  for  balance: —  25  Bx.  Dia.  Ap. ;  150  Cs.  Stan.  Tomat;  25  Cs.  each  of  Perf. 
Blk.,  Cher.,  and  Pears;  75  Cs.  Perf.  Peach.,  and  40  Cs.  B.  Bk.  Beans. 


60  CORPORATION  AND  VOUCHER  ACCOUNTING. 

The  Graham  Gro.  Co.  report  a  shortage  on  their  order  of  Aug.  17  of  5  Cs.  Per.  Tomat. 
and  I  Cs.  Blk.  Jam.    Have  sent  them  memorandum  of  credit  for  the  amount. 

We  have  sold  to  the  Eagle  Canning  Co.  on  acct.  50  Bx.  Dia.  Ap.  at  6j^c  per  lb.  deliv- 
ered at  our  warehouse.    Journal  entry. 

The  Student  buys  of  A.  W.  Nelson,  20  shares  of  Stock.  Mr.  Nelson  first  surrenders 
Certificate  No.  17  for  seventy-five  shares,  and  has  issued  to  him  two  other  certificat-es  for 
55  and  20  shares,  respectively.     He  then  transfers  the  latter  to  the  Student. 

We  have  paid  city  taxes  on  company  property  amounting  to  $287.95. 

H.  T.  Bell  buys  25  shares  of  Treasury  Stock  at  5  per  cent  above  par,  handing  us  a  cer- 
tified check  for  the  amount. 

Note — This  transaction  should  be  entered  in  the  Cash  Book,  "Treasury  Stock"  and  "Stock  Dis.  and  Prem- 
iums" being  credited  in  separate  entries. 

The  Buckeye  Manufacturing  Co.,  Cincinnati,  have  delivered  and  set  up  new  machinery 
for  the  Drier  and  rendered  a  bill  for  the  same,  dated  Aug.  22,  to  the  amount  of  $4426.70. 
We  pay  this  bill,  remitting  voucher  with  N.   Y.  dft. 

Sold  to  S.  H.  Arthur  &  Co.  at  list  prices,  less  5  per  cent,  terms  cash  on  receipt  of  goods : 
75  Bx.  Dia.  Peach.;  125  Cs.  Perf.  Tomat.;  75  Cs.  Stan.  Peas;  and  50  Cs.  Pie  Peach.    . 

Buyer,  E.  P.  Moody,  presents  foreman's  receipts  for  raw  products  purchased  and  deliv- 
ered to  the  Cannery,  amounting  to  $1568.75  and  to  the  Drier,  $862.15.  Voucher  Check  as 
heretofore. 

We  pay  P.  Harrington's  dray  age  bill  to  date,  $47.60.    Voucher  Check. 

We  have  sold  to  the  agent  of  Benson,  McGuire  &  Co.,  Chicago,  dealers  in  second  hand 
machinery,  lot  of  discarded  machinery,  castings,  belting,  etc.,  as  per  our  invoice,  amounting  to 
$2368.90.    Terms  Cash  on  receipt  of  shipment  at  Chicago.     Journal  entry. 

Finding  the  sugar  purchased  of  the  Chicago  Sugar  Refining  Co.,  on  the  3rd  inst.,  not 
so  well  adapted  to  our  purpose  as  other  brands,  the  superintendent  has  sold  out  the  remaining 
stock  on  hand,  42  barrels,  300  lbs.  each,  to  various  local  merchants  for  cash  at  5^c  per  lb. 
and  turns  in  the  money  received. 

On  Aug.  17,  we  drew  a  draft  on  C  H.  Bell  &  Co.,  Muncie,  Ind.,  through  our  local  bank 
for  the  amount  of  their  balance  favor  Douglas,  Fenton  &  Co.  The  bank  now  reports  col- 
lection, and  has  placed  the  amount  to  our  credit,  less  50  cents  for  collection.  Debit  Cash 
for  the  whole  amount,  and  credit  Cash  for  the  collection,  charging  the  item  to  General  Ex- 
pense. 

We  have  arranged  with  the  steward  of  Hartwell  College,  May  fair,  O.,  to  supply  that 
institution  with  our  goods  at  such  prices  as  may  be  agreed  upon,  we  to  prepay  the  freight 
charges.  The  first  order  is  for  canned  goods  at  ten  cents  per  case  in  advance  of  our  list  prices, 
as  follows :  60  Cs.  Perf.  Tomat. ;  25  Cs.  each  of  Perf.  Peach.,  Cher.,  Pears,  and  Blackber- 
ries. Also,  20  boxes  Dia.  Ap.  at  7^c,  and  25  Bx.  Dia.  Peach,  at  8^c.  Terms  cash  on  re- 
ceipt of  goods.  The  freight,  which  we  pay  in  Cash  amounts  to  $9.05  for  the  Dried  Fruit 
and  $10.65  ^or  the  Canned  Goods. 

Our  traveling  salesmen  report  Expense  Bills  for  the  week  as  follows :  Chas.  Baker, 
$51.90;  J.  A.  Martin,  $46.75.     Proceed  as  heretofore. 

We  pay  B.  &  O.  Ry.  freight  bills  for  the  week  as  follows : — 

Cleveland  Fruit  Co.,  7800  lb.  Peaches,  loc  per  100,  (Cannery  $4.68.  Drier  $3.12). 
Braille  &  McKnight,  tinning  supplies,  $21.50.  R.  S.  Cox,  Monmouth,  O.,  carload  beans 
$32.75.  (Cannery).  Marmaduke  &  Co.,  nails,  etc.,  for  Drier  casing  department  $14.20. 
Pro-rate  the  amounts  among  the  several  accounts  affected  as  heretofore. 

The  Treasurer  has  drawn  the  Company's  check  for  $25,  as  a  contribution  to  the  Fire- 
man's Relief  Fund,  as  authorized  by  the  Directors.     Charge  to  General  Expense. 

Supt,  Barnes  reports  weekly  pay  roll  as  follows : — 

Cannery  $2369.75;  Drier  $986.20. 

The  officers'  weekly  salaries  are  paid  as  heretofore,  with  the  addition  of  Henry  Simp- 
son's salary  as  night  watchman,  $15. 

Post  the  books  and  take  off  a  Trial  Balance.  When  the  same  is  approved,  continue  busi- 
ness as  follows : — 


MEMORANDA  FOR  AUG.  31.  61 


Memoranda  for  Week  Ending  Aug.  31. 

We  have  received  from  the  American  Sugar  Refining  Co.,  Cincinnati,  an  invoice  of  5a 
bbls.  Standard  Granulated  Sugar  (300  lb.  ca.)  at  5%c  per  lb.  billed  Aug.  22.  Terms,  10 
days  net.     We  send  voucher  check. 

E.  P.  Moody  has  transferred  25  Shares  of  the  Company  Stock  (Cer.  No.  20)  to  C.  R. 
Jones. 

A.  Monroe  &  Co.  remit  cash  for  their  purchase  of  July  27. 

The  Great  Northern  Hotel  Co.  order  at  list  prices,  net,  F.  O.  B.,  Chicago,  50  Cs.  each 
of  Perf.  Peach.,  Pears,  Blk.,  and  Cher.,  and  75  Cs.  each  of  Perf.  Corn  and  Peas. 

We  prepay  freight  in  cash,  $32.50. 

The  Buckeye  Manf.  Co.,  Cincinnati,  has  placed  additional  machinery  in  the  cannery, 
as  per  bill  of  Aug.  27,  $2568.90  which  is  paid  with  Voucher  Check. 

On  the  authority  of  the  Directors,  our  bank  balance  has  been  increased  by  the  deposit 
of  the  company's  63  day  note  of  $5,000,  the  bank  crediting  our  account  for  that  amount,  less 
63  day's  discount  (interest)  at  8  per  cent.  (Debit  Cash  for  face  of  note  and  credit  Cash  for 
discount.) 

A.  F.  Hanlon  has  purchased  30  Shares  of  Treasury  Stock  at  5  per  cent  premium,  pay- 
ing for  the  same  by  transferring  to  the  Company  H.  A.  Ellison's  note  (secured  by  mortgage) 
for  $2500  and  cash  for  balance. 

We  have  sold  to  A.  B.  McCall,  proprietor  of  the  LaClede  Hotel,  Evanston,  Ind.,  at  list 
prices  net,  20  Cs.  each  of  our  Stan.  Pears,  Cher.,  Corn,  and  Peas.  He  is  to  remit  cash 
when  goods  are  received. 

The  Ohio  Coal  Co.,  Vernon,  O.,  have  delivered  three  cars  of  Hocking  Valley  coal, 
46400,  47500  and  46100  lbs.,  at  $1.25  per  Ton  as  per  bill  of  Aug.  26.  Terms,  Cash. 
Voucher  Check. 

S.  H.  Bannon  &  Co.,  Syracuse,  O.,  order  at  list  terms  75  Cs.  Perf.  Tomat.,  60  Cs.  B. 
Bk.  Beans;  45  Cs.  Perf.  Peas;  and  50  Boxes  Dia.  Peach. 

Fayerweather  &  Ladew,  Chicago,  send  us  bill  dated  Aug.  20  $167.50,  for  machinery 
belting  that  has  been  duly  received  and  accepted.    Terms  5-30  n-60. 

A.  B.  Holloway  of  Columbus,  Ohio,  has  failed  and  we  have  accepted  a  cash  settlement 

of  his  account  at  50  cents  on  the  dollar,  the  receiver  sending  us  N.  Y.  dft.  for  the  amount." 

Note — Since  the  Sales  Ledger  Account  will  be  credited  from  the  Journal,  make  no  entry  of  this  payment 
in  the  Sales  Ledger  column  of  the  Cash  Book. 

C.  A.  Gregory  &  Co.  have  ordered  at  list  terms  125  boxes  Dia.  Ap. ;  175  Bx.  Orch. 
Peach.,  and  250  Cs.  each  of  Perf.  Peach,  and  Tomat. 

Wilson  &  Gray's  bill  for  desk  and  chairs  for  use  in  the  office,  $16.25,  has  been  paid  out 
of  Petty  •  Expense  Fund. 

L.  M.  Barnes  has  purchased  20  Shares  of  Treasury  Stock  at  5  per  cent  premium,  pay- 
ing for  the  same  with  his  30  day  note. 

We  have  sold  to  W.  B.  Hoyt  Co.,  Chicago,  the  following  wholesale  order  at  prices 
given;  F.  O.  B.,  Hillsdale;  500  Cs.  Perf.  Corn  @  90c;  500  Cs.  Perf.  Tomat.  @  85c;  400 
Cs.  B.  Bk.  Beans  @  95c;  300  Cs.  Perf.  Peas  @  $1.25;  200  Bx.  Dia.  Peach,  at  8c  per  lb.; 
they  are  to  settle  on  receipt  of  the  goods,  with  three  acceptances  of  $500  each,  at  30,  60, 
and  90  days  respectively,  and  cash  for  balance. 

Mr.  Moody  presents  foreman's  receipts  for  raw  products  purchased  and  delivered  as  fol- 
lows:     Cannery  $1132.40;  Drier  $528.75. 

Traveling  salesmen's  expense  bills  for  the  week,  which  are  paid  as  usual,  J.  A.  Martin, 
$47.50;  Chas.  Baker,  $61.15. 

The  pay  roll  for  the  week,  is  as  follows:  Cannery  $2387.50.    Drier  $951.15. 

The  B.  &  O.  Ry.  freight  bill  as  follows  :— 

Am.  Sugar  Refining  Co.,  Cincinnati,  50  bbls.  Sugar  for  Miscellaneous  Dept.  of  the 
Cannery,  $26.50;  Buckeye  Machine  Co.,  machinery,  etc.,  $39.40;  Ohio  Coal  Co.,  3  cars  coal 
$67.90;  Fayerweather  &  Ladew,  belting,  etc.,  $13.50. 

The  weekly  salaries  are  paid;  amounts  the  same  as  last  week. 

Post  the  week's  business  and  take  off  trial  balance.  If  correct,  proceed  with  the  next 
week's  business  as  follows: — 


•62  CORPORATION  AND  VOUCHER  ACCOUNTING. 

Memoranda  for  Week  Ending  Sept.  7. 

We  have  remitted  to  C.  H.  Webster  &  Co.  our  check  with  Voucher  No.  26. 

We  have  purchased  of  the  Ohio  Lumber  Co.,  Cleveland,  O.,  for  Drier  Casing  Dept.  per 
bill  of  Sept.  2,  17  M.  ft.  spruce  lumber  @  $11.65.  -Terms  60  days,  5  per  cent  off  if  paid  in 
_30  days. 

Benson,  McGuire  &  Co.  remit  N.  Y.  dft.   for  old  machinery,  etc.,  sold  them  Aug.  24. 

A,  T.  Melville  &  Co.  have  ordered  at  list  terms,  75  Bx.  Dia.  Ap.  and  50  Cs.  each  of 
Perf.  Peach.,  Pears,  and  Cher. 

C.  A.  Gregory  &  Co.  report  that  in  our  last  shipment  to  them,  8  boxes  of  "Orchard" 
Apples  were  sent  instead  of  the  "Diamond"  brand.  We  send  them  a  memorandum  of  credit 
for  the  amount  of  the  discrepancy. 

We  have  remitted  to  the  Chicago  Tinning  Co.  cash  to  balance  account,  also  to  cover 
-amount  of  Voucher  No.  31  less  allowed  discount.     (Two  Cash  Book  entries). 

Note — The  discount  period  for  the  account  expired  on  Sept.  5,  but  it  will  be  assumed  that  the  remit- 
iiance  was  made  in  time  to  save  the  discount. 

A.  B.  McCall  remits  check  for  his  purchase  of  Aug.  31. 

Marvin  &  Wright,  Cincinnati,  order  at  list  terms;  125  Bx.  Dia.  Peach,  and  150  Cs. 
Perf.  Tomat. 

R.  C.  Noble  &  Co.  of  Sharon,  Ind.,  have  recovered  their  financial  standing  and  have  ar- 
ranged to  pay  in  full  all  their  accounts  settled  under  the  receivership.  They  have  sent  us  a 
^check  for  the  portion  of  their  account  that  was  charged  to  Loss  and  Gain. 

We  have  handed  B.  F.  Sloan  our  check  for  rent  of  Warehouse  to  Oct.  i,  $75. 

The  W.  B.  Hoyt  Co.  of  Chicago  have  remitted  us  a  N.  Y.  dft.  for  that  part  of  our  bill  of 
Aug.  31  that  was  to  be  paid  in  cash,  also  the  three  acceptances,  of  $500  each,  30,  60,  and  90 
■days. 

The  Union  Label  Co.  of  Cincinnati,  have  delivered  an  assortment  of  labels  for  canned 
■goods  and  their  bill  for  the  same  at  30  days,  dated  Sept.  2,  for  $124.40.  (Charge  C.  G. 
Casing  Dept.) 

The  Kalamazoo  Asylum  has  remitted  voucher  with  check  for  their  order  of  Aug.  24. 

J.  M.  Rice  &  Co.,  Louisville,  Ky.,  order  at  list  terms  75  Cs.  each  of  Stan.  Peach.,  Pears, 
Cher.,  and  Corn.     With  the  order,  they  remit  N.  Y.  dft.  for  their  purchase  of  Aug.  10. 

James  Douglas  has  sold  all  his  remaining  stock  to  Geo.  P.  Morton  and  A.  F.  Hanlon, 
Mr.  Morton  taking  50  shares  and  Mr.  Hanlon  the  remainder.  Mr.  Douglas  first  surrenders 
the  shares  at  present  standing  to  his  credit,  taking  two  other  certificates  for  the  required 
amounts  which  he  transfers  to  Messrs.  Morton  and  Hanlon.  Issue  the  required  certificates, 
cancelling  those  surrendered;  make  the  necessary  entries  in  the  Stockholders'  Ledger  and 
.close  up  Mr.  Douglas's  account  in  this  book. 

S.  H.  Bannon  &  Co.  remit  cash  for  their  purchase  of  Aug.  10,  less  allowed  discount. 

We  remit  to  Ohio  Lumber  Co.  cash  to  balance  account. 

Stuart  &  Hall  remit  cash  for  their  purchase  of  Aug.  10,  less  allowed  discounts. 

The  Graham  Gro.  Co.  send  a  trial  order  for  40  Cases  each  of  our  Blk.,  Rasp.,  Straw., 
.and  Cr.  Ap.  Jelly.  We  allow  a  special  discount  of  5  per  cent  from  list  prices,  and  bill  goods 
at  30  days. 

We  remit  Voucher  Check  No.  43  to  Union  Spice  Co.,  Philadelphia,  for  amount  of  their 
bill  of  Aug.  7,  less  allowed  discount. 

J.  A.  Martin  sends  weekly  expense  bill  amounting  to  $53.50  and  requests  a  remittance 
of  $25  on  salary  account,  which  request  is  complied  with. 

A  called  meeting  of  the  stockholders  was  held  at  the  Company  office  on  Sept.  6,  and 
was  attended  by  stockholders  representing  a  majority  of  the  stock.  At  this  meeting  the  fol- 
lowing business  was  transacted : — 

1.  Minutes  of  previous  meeting  read  and  approved. 

2.  The  Secretary  read  the  resignation  of  James  Douglas  as  Treasurer  of  the  Company. 
Motion  carried  to  accept  and  place  on  file. 

3.  Mr.  Chas.  T.  Fenton  was  elected  Treasurer  to  fill  out  Mr.  Douglas's  unexpired  term. 

4.  Mr,  Martin  offered  a  resolution  that  the  Secretary  be  instructed  to  withdraw  from 


MEMORANDA  FOR  SEPT.  7  AND  14.  63 

sale  and  retire  that  portion  of  the  Treasury  Stock  that  was  still  unsold.  Considerable  op- 
position to  the  proposed  measure  was  developed,  and  a  vote  by  shares  was  demanded.  The 
Secretary  prepared  a  list  of  the  stockholders  voting,  with  the  number  of  votes  to  which  each 
was  entitled  as  follows : — 

In  favor  of  the  resolution : 

A.  F.  Hanlon Shares 

Geo.  P.  Morton 

Student    

Arthur  Moore   

Opposed  to  the  resolution : 

L.  M.  Barnes Shares 

E.  P.  Moody 

A.  W.  Nelson .^ 

H.  T.  Bell 

A.  B.  Hillis " 

The  chair  declared  the  resolution  adopted. 

5.  On  motion  it  was  resolved  to  declare  a  second  Cash  Dividend  of  five  per  cent,  to 
be  payable  on  Sept.  14,  provided,  the  same  should  be  justified  by  the  results  of  the  month's 
business. 

6.  Mr.  Chas.  A.  Townsend,  a  gentleman  engaged  in  promoting  the  formation  of  the 
American  Food  Supply  Company,  was  then  introduced  and  addressed  the  meeting.  Mr. 
Townsend  explained  that  a  number  of  leading  canneries  had  been  consolidated  into  a  new 
corporation,  the  American  Food  Supply  Co.,  located  at  Cleveland,  O.,  and  that  his  present 
mission  at  Hillsdale,  was  to  induce  the  stockholders  of  the  Central  Canning  and  Drying  Co. 
to  join  the  combination.  He  then  offered  many  arguments  and  illustrations  to  show  the 
various  advantages  of  such  a  course.  After  a  quite  general  discussion  of  the  proposed  con- 
solidation scheme,  the  matter  was,  on  motion,  referred  to  a  committee  consisting  of  Directors 
Hanlon,  Morton  and  Moore,  who  were  instructed  to  investigate  the  whole  proposition  fully 
and  make  a  report  at  a  specir/.  :neeting  of  the  stockholders  to  be  called  for  the  purpose  on 
Saturday,  Sept.  14,  at  the  Company's  office  at  8  o'clock  p.  m.,  due  notice  of  which  should 
be  sent  by  the  Secretary,  to  each  stockholder.   Meeting  adjourned.     ^ 

Write  up  the  minutes,  including  a  correct  record  of  the  vote  on  retiring  the  Treasury 
Stock,  after  which  make  the  necessary  Journal  entry  for  retiring  the  unsold  stock.  See 
page  22. 

Prepare  a  written  notice  as  required  for  mailing  to  the  stockholders,  and  submit  the  same 
to  your  teacher. 

Mr.  Moody  turns  in  foremen's  receipts  for  raw  products  purchased  for  the  week.  Can- 
nery, $942.65 ;  Drier,  $497.60. 

The  B.  &  O.  Ry.  presents  freight  bills  as  follows : — 

Ohio  Lumber  Co.,  Cleveland  O.,  car  load  lumber $21.50 

Union  Label  Co.,  Cincinnati,  box  of  labels 2.75 

Pay  as  usual  and  charge  to  proper  accounts. 

We  pay  P.  Harrington's  drayage  bill  to  date,  $71.40. 

The  weekly  pay  roll  is  as  follows : — 

Cannery,  $2297.20;  Drier,  $1021.15. 

Pay  office  salaries  for  same  amounts  as  last  week. 

Post  the  books  and  submit  trial  balance  as  usual. 

Memoranda  for  WeeR  Ending  Sept.  14, 

We  have  remitted  to  Cedar  Cr.  Mill  Co.   Voucher  Check  No.  41  for  theirbillof  Aug.  15. 
The  Eagle  Canning  Co.  hand  us  cash  to  balance  account. 

The  foreman  of  the  Drier  presents  a  charge  ticket  for  7^  M  ft.  boxing  lumber  ,@ 
$13.50,  transferred  to  the  Cannery. 


64  CORPORATION  AND  VOUCHER  ACCOUNTING. 

Through  Mr.  C.  M.  Fairchild,  agent  of  An^ell  &  French,  Cleveland,  O.,  we  have  sold  to 
that  firm  at  cash  terms  the  following  goods  delivered  at  the  Cannery  at  the  prices  given : — 

looo  Cases  Perf.  Tomat.  @  87^c;  500  Cs.  Perf.  Peas  @  $1.25;  250  Cs.  Perf.  Gr. 
Beans  @  $1.10;  250  Bx.  Dia.  Ap.  at  6^c  per  lb;  and  250  Bx.  Dia.  Peach,  at  834c  per  lb. 

Mr.  Fairchild  hands  us  a  check  for  $3000  to  apply  on  the  order,  the  remainder  to  be  paid 
when  the  goods  are  received  and  the  invoice  verified  by  the  buyers. 

Our  banker  has  notified  us  that  the  personal  check  given  by  A.  B.  McCall  of  Evanston, 
Ind.,  for  his  purchase  of  Aug.  31,  and  which  was  deposited  Sept.  7,  has  been  refused  by  the 
Drovers'  Bank  of  Evanston,  the  bank  upon  which  it  was  drawn.  The  reason  given  for  dis- 
honor, was  that  Mr.  McCall.  had  no  funds  to  his  credit  when  the  check  was  presented.  The 
check  has  been  protested,  the  fees  being  $1.75. 

We  hand  our  bank  a  check  for  the  amount  of  the  protested  check  plus  the  fees,  and  credit 
Cash  for  the  whole  amount,  charging  "Protested  Paper." 

Note — Cases  of  this  kind  are  quite  frequent  among  concerns  that  do  much  business  by  mail.  To  carry 
an  account  with  "Protested  Paper"  is  usually  more  convenient  than  to  recharge  the  amount  to  the  delinquent 
customer's  account.  If  after  the  customer  is  notified  of  the  returned  protested  paper,  he  should  make  a  re- 
mittance for  the  amount,  cash  is  debited  and  "Protested  Paper"  is  credited.  This  disposal  of  the  transaction 
obviates  the  inconvenience  of  making  entries  affecting  the  Sales  Ledger  accounts.  When  the  books  are 
closed,  the  balance  of  the  Protested  Paper  account  stands,  as  a  resource,  but  if  there  are  items  on  it  that 
represent  undoubted  losses  to  the  business,  these  may  be  segregated,  and  their  amount  closed  into  Loss  and 
Gain.  Protested  notes  may  be  carried  to  this  account  in  the  same  way.  Many  firms  deposit  their  customers' 
notes  with  their  bankers,  the  bank  crediting  them  as  in  the  case  of  cash  deposits.  In  this  case,  should  the 
note  be  dishonored  and  protested,  Cash  is  credited  and  "Protested  Paper"  debited  when  the  note  is  returned, 
the  same  as  in  the  case  of  a  protested  check. 

The  Graham  Grocery  Co.  remit  Chicago  dft.  for  our  bill  of  Aug.  17,  less  Mem.  6f  Credit 
and  allowed  discount. 

C.  A.  Gregory  &  Co.  have  settled  their  account  by  giving  us  their  acceptance  at  30  days 
for  the  amount  of  our  bills  for  Aug.  17  and  31,  less  allowed  discount  and  credits.  (Deduct 
Mem.  of  Credit  on  dried  fruit  before  computing  discount.) 

E.  P.  Moody's  note  of  Aug.  10,  given  as  payment  of  Installment  No.  3,  is  paid  in  full, 
in  cash  with  the  interest  due  to  date. 

We  have  taken  out  an  insurance  policy  with  the  National  Fire  Ins.  Co.  on  goods  stored 
in  warehouse,  the  premium  on  which  amounts  to  $11.25,  and  which  we  have  paid  in  cash. 

We  have  sold  to  M.  C.  Anderson  at  30  days,  refuse  products  of  the  Cannery,  $74.90, 
and  of  the  Drier,  $47.25. 

S.  C.  Joy,  Steward  of  Hartwell  College,  remits  his  check  in  payment  of  our  bill  of  Aug. 
24,  and  sends  another  order  for  10  Cs.  each  of  our  entire  line  of  Jellies,  20  Cs.  B.  Bk.  Beans, 
and  25  Cs.  Perf.  Corn.  We  charge  20  cents  in  advance  of  list  prices.  Terms,  Cash.  We 
prepay  freight  charges  in  cash,  $7.20. 

A.  T.  Melville  &  Co.  remit  cash  in  payment  of  our  bill  of  Aug.  17. 

A.  Monroe  &  Co.  balance  their  account  by  handing  us  their  30  day  note  bearing  interest 
at  8  per  cent. 

We  send  Voucher  Check  No.  55  to  A.  C.  Marmaduke  &  Co.  for  amount  of  their  bill, 
less  discount. 

A  special  sale  of  our  goods,  delivered  at  the  Cannery,  has  been  made  to  Dalton, 
Springer  &  Allen,  187-195  Wells  St.,  Chicago,  as  follows: — 

1750  Cs.  Stan.  Corn  @  60c. 

945  Cs.  Stan.  Tomatoes  @  55c. 

500  Boxes  Orch.  Peach,  at  6%c  per  lb.    Terms,  net  Cash. 

The  Hillsdale  Fuel  Supply  Co.,  Hillsdale,  O.,  have  delivered  at  the  Cannery  75  Tons 
Hock.  Val.  coal  @  $2.15,  per  bill  of  Sept.  12.    Terms  30  days. 

H.  A.  Ellison's  note  for  $2500  dated  July  28,  in  favor  C.  T.  Hanlon  and  transferred  to 
the  Company,  has  been  paid  in  full  with  interest  at  6  per  cent  from  date. 

J.  A.  Martin  has  sold  all  his  Canning  Co,  Stock  to  Arthur  Moore.  Make  the  necessary 
transfers, 

O.  C.  Oliver  &  Co,  remit  Cash  to  balance  their  account  less  allowed  discounts. 

Chas,  Baker  reports  expense  bill  for  previous  two  weeks  $72.50,  and  J.  A.  Martin  for 
one  week  $52.70. 


MEMORANDA  FOR  SEPT.  14. 


65 


Mr.  Moody,  the  buyer,  presents  foremen's  receipts  for  raw  products  purchased  for  the 
week  as  follows:    Cannery,  $1643.85;  Drier,  $791.20. 

The  weekly  Pay  Roll  is  as  follows:     Cannery,  $2187.50;  Drier,  $1129.76. 

P.  Harrington  presents  drayage  bill  to  date,  $26.95. 

The  usual  weekly  salaries  are  paid. 

J.  A.  Martin  and  Chas.  Baker  are  each  credited  with  one  month's  salary,  and  checks  are 
sent  them  for  such  sums  as  will  balance  their  accounts. 

We  have  deposited  at  the  bank  C.  A.  Gregory  &  Co.'s  acceptance  of  this  date,  the  same 
being  placed  to  our  credit  less  }^  of  one  per  cent  discount  from  face.  (Two  entries  in  Cash 
Book  as  in  the  case  of  the  Company's  note  deposited  Aug.  31). 

A.  B.  McCall  of  Evanston,  Ind.,  has  written  a  satisfactory  explanation  regarding  the 
protesting  of  his  check,  and  stating  that  he  will  in  a  few  days  send  draft  for  the  amount, 
plus  the  protest  fees. 

The  purchasing  agent  of  Dalton,  Springer  &  Allen  has  handed  us  a  check  for  the  amount 
of  their  recent  purchase. 

You  will  now  proceed  to  the  second  general  closing  of  the  books,  carrying  out  the  fol- 
lowing directions,  in  the  order  given : — 

1.  Post  the  books  to  date  and  prepare  a  trial  balance  which  you  will  submit  to  your 
teacher  for  approval. 

2.  Prepare  a  schedule  showing  the  balances  of  the  several  accounts  in  the  Sales  Ledger. 
Compare  the  total  of  these  with  the  balance  of  the  Sales  Ledger  Account. 

3.  Prepare  a  statement  of  the  business  for  the  period  commencing  August  17,  and 
ending  September  14,  following  the  general  form  of  your  statement  for  August  17,  and  as- 
suming the  following  Inventories : —  • 

Note — In  preparing  this  statement,  be  very  careful  to  make  the  right  disposal  of  the  inventories  of  the  In- 
terest Account.  The  General  Expense  Account  must  also  be  credited  on  the  statement  with  the  inventory  of 
unexpired  rent  and  insurance. 

Inventories  for  Closing  Sept.  14, 


Plant  (Inventory  at  cost) 
Canned  Goods 

"  "      Raw  Prod. 


Casings 
Miscel. 


Dried  Fruits 


"  "        Raw  Prod.  ' 

"  "        Casings 

Fuel 

Interest  Receivable 
Interest  Payable 

General  Expense  (unexpired  rent  and  insurance) 
Petty  Expense  (as  per  P.  Exp.  Book) 


158419 

55 

34598 

60 

287 

50 

291 

75 

564 

20 

6975 

60 

328 

10 

125 

160 

76 

40 

116 

25 

95 

4.  When  your  statement  is  prepared,  submit  it  for  approval. 

5.  After  entering  the  inventories  in  the  several  accounts,  close  the  Ledger  by  Journal 
entries  as  in  your  last  closing. 

6.  Close  and  rule  up  the  Cash  Book  and  all  accounts  in  the  General  Ledger  that  are  in 
balance,  forwarding  all  inventories. 

7.  Make  the  necessary  entries  in  the  Journal  and  Cash  Book  and  t)ividend  Book  for 
declaring  a  cash  dividend  (Dividend  No.  2)  of  5  per  cent  of  the  issued  stock.  Post  these 
entries  and  rule  up  the  accounts  that  are  in  balance. 

Note — As  the  dividend  called  for  is  greater  than  the  amount  of  the  net  gain,  the  excess  must  be  drawn 
from  the  surplus  account. 

The  following  form  of  entry  is  required : — 

Loss  and  Gain .^—i— — ^^ 

Surplus __ 

Dividend  No.  2 i.-__^_i^_ 

'     A  called  meeting  of  the  stockholders  to  consider  the  advisability  of  effecting  a  sale  of 
the  business  to  the  American  Food  Supply  Co.,  was  held  on  Sept.  14,  1901. 


66  CORPORATION  AND  VOUCHER  ACCOUNTING. 

The  advisory  committee,  reported  favorably  upon  the  acceptance  of  the  following  propo- 
sitions, which  have  been  formally  submitted  by  representatives  of  the  American  Food  Sup- 
ply Co. 

1.  That  the  C.  C.  &  D.  Co.  convey  through  bill  of  sale  and  deed,  to  the  A.  F.  S.  Co.  all 
the  real  estate,  plant,  machinery,  stock  and  other  property,  also,  all  accounts,  cash,  bills  and 
other  assets,  as  shown  by  the  financial  statement  for  September  14,  less  the  amount  of  net 
gains  to  date  which  are  to  be  distributed  in  Cash  among  the  several  stockholders,  before  the 
transfer  is  made. 

2.  The  A.  F.  S.  Co.  are  to  assume  the  payment  of  all  accounts,  notes,  acceptances,  or 
other  liabilities  of  the  C.  C-  &  D.  Co.,  as  shown  by  the  books  on  this  date. 

3.  In  consideration  of  this  sale  and  transfer  of  their  business,  and  of  the  surrender  of 
the  C.  C.  &  D.  stock  at  present  held  by  them,  the  stockholders  of  the  C.  C.  &  D.  Co.  are  to  re- 
ceive the  amount  of  $276,000,  in  paid  up  stock  of  the  A.  F.  S.  Co.,  which  is  an  increase  of 
twenty  per  cent  over  the  present  amount  of  issued  stock  of  the  C.  C.  &  D.  Co.  Said  stock 
is  to  be  distributed  among  the  stockholders  of  the  C.  C.  &  D.  Co.  in  proportion  to  their 
present  holdings  of  stock  as  shown  by  the  Company  books, 

4.  Upon  the  acceptance  of  this  proposition,  and  the  formal  and  legal  transfer  of  the 
property  in  accordance  with  the  terms  stated,  the  representatives  of  the  A.  F,  S.  Co.  are  to 
assume  immediate  control  and  management  of  the  business  and  property  of  the  C.  C.  &  D. 
Co. 

After  a  full  discussion  of  the  propositions  submitted,  it  was  unanimously  decided  to  ac- 
cept them,  and  the  officers  of  the  company  were,  on  motion,  authorized  to  have  the  necessary 
legal  papers  prepared  for  effecting  the  sale  in  accordance  with  the  terms  of  the  propositions 
as  submitted. 

The  Secretary  reported  that  after  paying  Dividend  No.  2,  there  was  a  balance  in  the 
Surplus  Fund  of  about  eighty-seven  dollars,  that  was  still  undistributed,  and  he  invited  sug- 
gestions from  the  stockholders  present  as  to  the  best  means  of  disposing  of  it.  Mr.  Martin 
called  attention  to  the  worthy  work  and  purposes  of  the  Canners'  Benefit  Association,  an  or- 
ganization that  had  lately  been  formed  among  the  employees  of  the  Company,  and  he  moved 
that  the  balance  of  the  Surplus  Account,  referred  to,  be  donated  in  cash  to  this  organization. 
The  motion  was  adopted  by  unanimous  vote. 

The  meeting  then  adjourned. 

The  books  are  now  to  be  finally  closed  and  the  corporation  dissolved  through  the  trans- 
fer of  its  interests  and  the  surrender  of  stock  by  the  stockholders.  To  accomplish  this,  pro- 
ceed as  follows : — 

1.  Make  a  credit  entry  in  the  Cash  Book  for  the  balance  of  the  Surplus  Account,  to 
be  donated  to  the  "Canners'  Benefit  Association;"  when  this  entry  is  posted,  the  Surplus 
Account  will,  of  course,  be  in  balance. 

2.  Balance  and  rule  up  the  Cash  Book,  and  bring  down  the  balance  of  cash  on  hand. 

3.  Make  Journal  entries  as  follows,  for  the  double  purpose  of  setting  forth  the  facts  as 
to  the  sale  of  the  business  to  the  American  Food  Supply  Co.,  and  to  effect  the  closing  of  the 
books,  upon  the  dissolution  of  the  Central  Canning  and  Drying  Co. : — 

Note — The  items  of  these  entries,  are  with  the  exception  of  the  cash  balance,  the  same  as  those  given  in 
the  last  statement,  and  should  be  taken  from  it.     As  the  Surplus  Account  is  closed,  its  balance  is  omitted. 

(a)  Make  a  Journal  entry,  charging  the  American  Food  Supply  Co.  with  the  entire 
resources  of  the  business  as  shown  by  the  balances  of  the  several  resource  accounts,  and 
crediting  these  accounts  with  their  several  balances.  In  the  explanation  for  this  entry,  state 
the  terms  and  conditions  of  the  sale,  by  which  the  business  of  the  Central  Canning  &  Drying 
Co.  is  to  be  terminated. 

(b)  Make  a  Journal  entry,  crediting  the  American  Food  Supply  Co.  with  the  total  of 
the  liabilities,  and  debit  the  liability  accounts  with  their  several  balances.  Explain  that,  by 
the  terms  of  the  sale,  these  liabilities  are  to  be  assumed  by  the  American  Food  Supply  Co. 

5.  Post  these  entries,  after  which  the  Cash  Book  and  the  accounts  of  the  General 
Ledger  being  in  balance,  are  closed  and  ruled  up. 

Note — Add  each  side  of  the  several  accounts,  before    ruling    them    up,    to    see    that    no    error    has    been 
made  in  transferring  the  amounts. 


CONCLUDING  SUGGESTIONS;,   ,  :     .    :  :  :,\         67 

6.  Assuming  that  all  stock  has  been  surrendered,  write  the  word  "Surrendered"  in  red 
ink  across  the  face  of  each  certificate  in  the  Stock  Certificate  envelope,  and  re-attach  the  sev- 
eral certificates  to  their  original  stubs,  then  debit  each  account  in  the  Stockholders'  Ledger 
with  the  amount  of  surrendered  stock  and  rule  up  the  several  accounts. 

Concluding  Suggestions. 

The  act  of  selling  out  the  property,  good  will,  etc.,  of  the  business,  and  the  formal 
surrender  of  the  stock,  effects  the  dissolution  of  the  corporation,  although,  it  does  not  destroy 
the  individual  liability  of  the  several  incorporators  for  the  company  debts  and  obligations, 
should  the  American  Food  Supply  Co.  default  in  its  discharge  of  the  same. 

In  most  states,  the  laws  prescribe  the  manner  in  which  a  corporation  may  be  legally  dis- 
solved, and  when  such  a  step  is  contemplated,  it  is  necessary  to  proceed  in  accordance  with 
these  laws. 

At  this  point,  it  is  well  to  admonish  the  student  that  in  all  matters  affecting  the  legal 
status  of  a  corporation,  it  is  the  well-established  custom  for  the  parties  interested  to  proceed 
only  in  accordance  with  the  advice  and  co-operation  of  a  competent  attorney.  To  him  is  as- 
signed the  task  of  preparing  the  various  legal  documents  required,  as  the  necessity  for  hav- 
ing these  made  out  in  proper  legal  form  is  a  matter  of  too  much  importance  to  be  left  to  in- 
experienced hands. 

It  is  also  well  for  the  student  to  perceive  that  the  consolidation  of  several  corporations 
by  a  bona  Me  sale,  is  a  very  different  affair,  from  the  formation  of  a  "combine"  or  "trust," 
in  which  the  several  combining  corporations  continue  to  maintain  their  corporate  existence, 
although  operated  as  a  single  concern.  The  first  method  is  entirely  lawful,  and  does  not 
differ  materially  from  those  business  consolidations  among  individuals  or  partnerships,  in 
which  one  man,  or  firm,  buys  out,  or  forms  lawful  partnerships  with  the  others.  The  sec- 
ond method  of  combination,  however,  is  now  contrary,  not  only  to  the  laws  of  the  United 
States,  but  to  those  of  most  of  the  several  states,  and  in  point  of  fact,  the  "trust,"  as  an  il- 
legal combination  to  control  trade,  has  practically  gone  but  of  existence. 

When  one  company  sells  out  to  another,  as  in  the  case  of  the  Central  Canning  &  Drying 
Co.,  the  change  of  management  may,  however,  be  merely  nominal,  the  same  men  may,  as 
employees  of  the  new  company,  continue  to  direct  the  affairs  of  the  business,  as  before,  and 
there  might  not  be,  and  probably  would  not  be,  any  noticeable  change  in  the  ordinary  rou- 
tine of  the  company  affairs.  Very  likely,  the  same  operating  books  would  continue  to  be 
used,  but  the  bookkeeper  would,  of  course,  have  nothing  to  do  with  the  general  corporation 
affairs,  which  would  be  administered  at  the  central  office  of  the  purchasing  company. 

Sometimes,  also,  the  financial  management  of  the  business  is  conducted  at  the  central 
office,  the  local  establishment  concerning  itself  only  with  the  business  of  manufacture. 

And  now,  at  the  conclusion  of  his  work,  it  may  be  well  again  to  remind  the  student  that 
the  methods  of  corporation  and  manufacturing  business  and  accounting,  as  presented  in  this 
course,  are  by  no  means  assumed  to  be  the  only,  or  even  the  best  ones  that  might  be  em- 
ployed. Probably  no  two  business  concerns  would  conduct  their  affairs  or  keep  their  books 
in  quite  the  same  way. 

Accountants  in  these  establishments  learn,  by  trial  and  experience,  what  forms  of  books 
and  what  accounting  devices  are  best  suited  to  the  special  conditions  of  the  business. 

It  is  believed,  however,  that  the  present  course,  if  the  student  has  performed  his  work 
faithfully,  will  have  made  him  fairly  familiar  with  the  more  important  of  the  principles  and 
methods  that  would  be  likely  to  be  employed  under  the  conditions  given,  and  that  this  knowl- 
edge may  prove  of  the  greatest  service  to  him,  should  he  ever  engage  in  commercial  pursuits. 


INDUX 


PAGE. 

Articles  of  Incorporation 2 

Form  of   •.•••.•. ^°'   " 

Assessments,  Definition  of 3 

Levying  and  Collecting 7,    8 

Notices  of 8 

Assessment  Book 7 

Form   of I7 

Bill,   Form  of 37 

Bonds 4 

By-Laws,    Should    Include    What 48 

Bonus,   Definition   of 4 

Cash     Book,     Special     Column,     Description     and 

Form    of 38,39 

Central    Canning  and    Drying    Company,    Organiza- 
tion of    29,  30 

Charter,    Definition    of i 

Closing  Entries ■ S8 

Closing   Ledger   Accounts 58 

Closing  the  Books,  Instructions  for 55 

Close   Corporations 5 

Commercial    Travelers'    Expense    Bills 47 

Corporations 1-8 

Books   Required   for   the   Organization   of 5,    6 

Classification   of 1 

Dissolution  of 66 

Exercises     in     Journal    and     Cash     Book    En- 
tries   25,  26 

Finances 3 

Liabilities  of 3 

Opening    Books     of,     Under    Various     Condi- 
tions  19,24 

Powers  and  Liabilities  of . .  •. 2,    3 

Procedure    in    the    Organization    of i 

Corporation  Accountancy 5 

Dividends,  Definition  of 3 

Declaring  and  Distributing 8 

Dividend  Book,  Form  of 17 

Donated  Stock,  Disposal  of  and  Entries  Required..  24 
Double  Liability  Corporations    3 

Earnings 4 

Franchise,  Definition  of 4 

Franchise  Account 20 

Funds,  Definition  of 4 

Glendale  Creamery  Company,  Memoranda  of  Trans- 
actions  9-18 

Glendale  Creamery  Company,  Entries  for 18,  19 

Interest  Account,  Inventories  and  Gains  of 55 

Installment  Book,  Form  of ' 13 

Installments,  Definition  of 3 


PAGE. 

Installment  Certificates,  Transfer  of 7 

Form  of 12 

Installment    Certificate    Book 6 

Installment  Ledger,  Description  of 6 

Form  of 14 

Journal,    Six    Column,    Form   of 33 

Limited  Corporations 3 

Minute  Book,  Example  of 9 

•Minutes   of   Corporation    Meetings 2 

Model  Trial  Balance  and  Statement 56,  57 

Open  Corporations 5 

Operating  Books 5 

Petty  Expense  Book,  Description  and  Form  of . . . .  39 

Promotion i 

Protested    Paper,    Disposal   of 64 

Quotation  Lists 36 

Raw  Products,   Purchase  of  in  Canning  Business..  44 

Recording   Sales   of   Merchandise 36 

Review   Quiz 27,  28 

Sales  Journal,  Description  and  Form  of 2^,  27 

Sales   of   Merchandise,   Procedure,   Etc 38 

Single  Liability  Corporations 3 

Six  Column  Journal,  Description  and  form  of 33,  36 

Stock,   Definition   of i 

Classification   of 4 

Transfer  of 6,     7 

Stock   Certificates 6,  15 

Transfer  of 7 

Stockholders,  Liabilities  of 3 

Stockholders'   Ledger 6,  16 

Stock  Subscription  Agreement 2,  9,  10 

Subscription  Account,  Entries  for 18,  23,  24 

Terms   of   Sale 36 

Time   Book,   Description   and   Form  of 40 

Treasury  Stock,  Definition  of 4 

Journal    Entry    for 19 

Sale  of,  at  a  Premium  or  Discount 19 

Retirement   of 22 

Trusts,   Distinguished    from    Corporations 67 

Voucher  System 31 

Voucher,  Form  of ' 32 

Disposal  of 35 

Voucher  Check,  Form  and  Description  of 52,  53 

Voucher   Payable  Register,  Form    and    Description 

of 34,  35 

Voting    and    Elections 3 

Unlimited   Liability   Corporations 3 


YE  027 IT 


UNIVERSITY  OF  CAUFORNIA  UBRARY 


